Alembic boosts Q3 profit estimates for chemicals

11 October 2010 21:23  [Source: ICIS news]

NEW YORK (ICIS)--US-based investment advisory firm Alembic Global Advisors boosted third-quarter profit estimates for several chemical companies on Monday and maintained that Wall Street forecasts are too low.

 “A disconnect between product level margins and earnings estimates suggests that the consensus may be being too cynical in its Q3 2010 earnings estimates,” said Hassan Ahmed, partner and head of research at Alembic, in a research note.

“A normalisation of operating rates post the outage-plagued Q2 2010 should also provide a volume boost to earnings. Positive Q3 demand-related comments from BASF’s CEO in late September coupled with encouraging US chemical railcar loading data also point to Q3 being a strong quarter volume wise,” he added.

Ahmed hiked third-quarter earnings per share (EPS) estimates on US-based chemical companies DuPont from 29 cents to 32 cents, and Huntsman from 13 cents to 20 cents.

He also boosted his Q3 earnings before interest, tax, depreciation and amortisation (EBITDA) forecast for Netherlands-based LyondellBasell from $827m (€587m), to $1.01bn.

Ahmed was significantly above consensus on third-quarter EPS estimates for Celanese, Dow Chemical, LyondellBasell, Methanex, Solutia and Westlake Chemical. The analyst had “overweight” ratings on all of these companies with the exception of Westlake, which had a “neutral” rating.

“Our estimate raises for DuPont and Huntsman stem from continued strength in the titanium dioxide market,” said Ahmed.

He raised his estimate on LyondellBasell on higher-than-previously-forecasted polyethylene margins.

($1 = €0.71)

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By: Joseph Chang
+1 713 525 2653



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