HSBC upgrades Dow after Rohm deal, raises price target

03 April 2009 14:52  [Source: ICIS news]

TORONTO (ICIS news)--HSBC has raised its rating and target price for the shares of Dow Chemical following the completion of Dow’s acquisition of specialty chemicals producer Rohm and Haas, it said in a research note on Friday.

The London-based international bank raised its rating to “neutral,” from “underweight,” and it raised its target price to $10, from $5. Dow’s shares closed at $9.94 on Thursday in New York, up almost 13%.

“We believe that with [Dow’s] asset sale process well underway and with the overhang of a dividend cut, equity issuance, and credit rating downgrade mostly lifted, the stock should start trading on fundamentals again,” the analysts said.

The analysts also said the $1.675bn (€1.240bn) price Dow achieved on the divestment of its Morton Salt business to Germany’s fertilizer firm K+S was “respectable.”

“We consider this price at the higher end of our and company expectations,” they said.

In a K+S conference call on Thursday, analysts said the price was surprisingly low.

($1 = €0.74)

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By: Stefan Baumgarten
+1 713 525 2653



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