JP Morgan lowers earnings forecast, rating for US Dow

26 June 2012 22:05  [Source: ICIS news]

HOUSTON (ICIS)--Analyst JP Morgan lowered on Tuesday US Dow Chemical's rating to neutral from overweight because of the slowdown in the global economy.

Slower growth would cause utilisation rates to drop, JP Morgan said. In addition, demand for Dow's specialty products lines could decline, pressuring margins.

Offsetting these trends would be lower raw-material costs, JP Morgan said.

JP Morgan reduced Dow's second-quarter earnings/share forecast to 61 cents from 70 cents. That compares with a consensus of 66 cents.

JP Morgan also lowered its 2012 earnings/share estimate to $2.40 from $2.60, compared with a consensus of $2.50.

JP Morgan's 2013 estimate was lowered to $3.10 from $3.30, compared with a consensus of $3.25.

Meanwhile, JP Morgan noted some shutdowns that could affect the company, including a six-week turnaround at the company's cracker in Fort Saskatchewan in Canada.

Dow subsidiary Wolff Walsrode is also taking European capacity off line, which would slow down growth in functional materials.

The strong first-quarter performance of Dow's agricultural business could have taken away volume from the second quarter, JP Morgan said. Weakness in urethanes ad epoxies could hold back returns in Dow Performance Material business.

By: Al Greenwood
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