JP Morgan upgrades Ashland's stock outlook

25 June 2008 13:58  [Source: ICIS news]

TORONTO (ICIS news)--JP Morgan has upgraded the shares of US chemicals producer and distributor Ashland to “neutral,” from “underweight”, it said in a research note on Wednesday.

 

The shares were trading at a reasonable value following a 17.3% decline since May, while the S&P 500 stock index declined only 6% over the same period, the investment bank said.

 

Ashland’s shares closed at $48.21, down 4.8%, on Tuesday in New York.

 

Downside risks to Ashland’s outlook included raw material cost inflation on the back of the rising price of oil and oil derivatives and the prospect of lower demand for it products due to slowing economies in the US and Europe, the bank said.

 

A prolonged slowdown in US domestic manufacturing, construction and auto markets, as well as higher raw material costs could lead to additional profit contraction, and the share price could come under pressure, it said.

 

A downturn in the market for motor oil and higher base oil prices could lower operating results for Ashland’s Valvoline lubricants, leading to share price underperformance, JP Morgan said.

 

JP Morgan added it expected Ashland to resume its share repurchases later this year.

 

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By: Stefan Baumgarten
+1 713 525 2653

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