23 September 2011 15:23 [Source: ICIS news]
LONDON (ICIS)--Dutch-based AkzoNobel maintains an “outperform” status despite a drop in target share price, because specialty chemicals continue to be a steady contributor to earnings, analysts at Bernstein Research said on Friday.
Based on this outlook, US-based Bernstein continues the AkzoNobel’s “outperform” status, but has reduced the company’s target share price to €50 ($67) from €60 because of slowing raw materials prices.
AkzoNobel’s paints and coatings businesses have withstood raw materials inflation before and are capable of doing it again, Bernstein added.
According to the analysts, the specialty chemicals industry produces a large variety of niche commodities, which have relatively stable and elevated earnings before interest, tax, depreciation and amortisation margins, and this should encourage the company’s future earnings.
Bernstein said in its report that declining markets in the ?xml:namespace>
“The strength of the Chinese construction market could tail off, but as China only accounts for 9% of AkzoNobel’s sales, this will have a minimal effect on the company’s performance,” Bernstein said.
“We fear the dollar may depreciate, but as America only accounts for 17% of AkzoNobel’s sales, this will have only a minor effect on the company’s performance as a whole,” it added.
($1 = €0.74)
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