Cabot poised to grow profits in 2009 - JP Morgan

29 August 2008 16:05  [Source: ICIS news]

TORONTO (ICIS news)--US chemicals producer Cabot has reached cyclical low point and will enter a growth stage given the flattening of crude oil prices, JP Morgan said on Friday.

 

“We believe Cabot is now poised to grow earnings per share (EPS) strongly over a multi-year period from a cyclical bottom,” JP Morgan said in a research note to clients.

 

“2009 should prove a materially better year.”

 

The analysts upgraded Cabot’s shares to “overweight,” from “neutral.”

 

Cabot’s profitability had been under pressure due to an ongoing lag between raw material costs and product price increases in the contracted part of its carbon black operations, the company’s largest business, the analysts said.

 

However, carbon black raw material costs had began to come down following crude oil price trends and contractual product prices were moving up, they said.

 

Also, there were signs of upward movement in prices in the company’s tantalum business, they added.

 

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By: Stefan Baumgarten
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