Upping Eastman Chemical Target

Tue. July 15, 2008; Posted: 07:10 AM

Jul 15, 2008 (Zacks Investment Research via COMTEX) -- VAL | Quote | Chart | News | PowerRating -- Eastman Chemical Co. (EMN) has a strong fibers business and solid financials. The company had an impressive first quarter, marked by increasing prices, volume gains and strength in several end markets. The company is likely to benefit from its recent focus on the industrial gasification business. Thus, we rates EMN shares a Buy. Accordingly, we have set a new price target of $80.00. Eastman is benefiting from an improved product mix. The company is seeing strong demand in several end-markets including PCI, Specialty Plastics, and Fibers. Eastman is hiking prices of major products, a policy which is likely to offset higher operating costs and help earnings. The company is undergoing continuous restructuring and cost cutting. The company closed its polyethylene terephthalate (PET) polymer operations in Mexico and Argentina. It further plans to abandon operations at a facility in South Carolina. Apart from this, Eastman is planning to shut down the DMT intermediates facility in South Carolina. Eastman plans to expand PET capacity based on IntegRex technology by 50% in 2008. The company is also planning to increase the PTA intermediate capacity in South Carolina. Following higher demand for acetate filter tow in the Fibers segment, the company plans to increase the acetate tow capacity by 9KMT at its Workington, U.K. facility in 2008. We believe these factors will contribute meaningfully to the company's earnings over the near term. Eastman's cash flow situation is improving. The balance sheet is in good shape, and the company enjoys good financial flexibility. Valspar is expanding globally through strategic acquisitions. It is also close to completing the restructuring of its industrial plants by 2008, which is expected to lower costs. In the first two quarters, Valspar repurchased 1.85 million shares. It plans to buy back 3.25 million shares in 2008. Read the full analyst report on EMN

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For full details on Eastman Chemical Co (EMN) click here. Eastman Chemical Co (EMN) has Short Term PowerRatings of 7. Details on Eastman Chemical Co (EMN) Short Term PowerRatings is available at This Link.

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