25 October 2007 16:42 [Source: ICIS news]
TORONTO (ICIS news)--Dow Chemical remains under pressure to take steps to create shareholder value as its shares underperform amid continued strong cashflows, HSBC said on Thursday in a note commenting on Dow’s third-quarter results.
“We believe that a dividend boost, a large share buyback programme or specialty acquisitions to move the earnings mix away from commodity chemicals are possible courses of action,” the bank said in a note to clients.
“We believe that there is enough value in a potential buyout of Dow - in light of the various asset disposal options available - to keep potential bidders interested, particularly if management maintains its reluctance to use its cash efficiently,” it added.
Commenting on Dow’s third quarter, HSBC said the results missed market expectations and cited weakness in the company’s performance chemicals segment, primarily a result of continued slow
Income from Dow’s equity affiliate income also declined as strong contributions from Dow Corning, Equate Petrochemical Co in Kuwait and MEGlobal could not offset the impact of turnarounds at Optimal, lower licensing revenues at Univation and weather-related limitations on gas availability at Compañía MEGA, the bank said.
HSBC rates Dow’s shares “overweight” with a target price of $55.
The stock was down 0.70%, at $43.67, in Thursday morning trading in
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|
Asian Chemical Connections