JP Morgan trims Ashland on rough August for chems

23 September 2008 14:47  [Source: ICIS news]

TORONTO (ICIS news)--JP Morgan has reduced its profit estimates for US chemicals producer Ashland due to weak August business trends, in particular in the company’s water treatment and performance operations, it said on Tuesday.

 

The bank reduced its earnings per share (EPS) estimate for Ashland’s fiscal 2008 fourth quarter to 35 cents, from 65 cents. For the full fiscal year ending 30 September, JP Morgan’s EPS estimate was now $2.65, down from $2.95.

 

The analysts also reduced their fiscal 2009 EPS estimate by 10 cents to $3.00, they said.

 

“August was a rough month for chemical companies generally,” the analysts said.

 

Ashland’s water treatment and performance materials results were particularly weak in August, with revenues decelerating sharply from July due to volume decreases and negative currency translation effects stemming from the recent weakness of the euro, they said.

 

“We would expect both operations to report close to break-even results in the fiscal 2008 fourth-quarter,” JP Morgan said but added it expected the businesses to recover over coming quarters as price increases passed through to customers.

 

Despite the cut in EPS estimates, JP Morgan rates Ashland’s shares “overweight”.

 

Positives in Ashland’s outlook included its acquisition of rival Hercules which offered a possible revival of excellent earnings growth over a multi-year period, JP Morgan said.

 

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Author: Stefan Baumgarten
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