Jefferies Reiterates Buy on Eastman Chemical (EMN)
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Jefferies reiterated a Buy rating and $88.00 price target on Eastman Chemical (NYSE: EMN). The concerns for an auto end market cooldown remain, but market share gains should help Advanced Materials add $0.02 to EPS in Q3. Also, with the assumption that oil prices do not retreat below $40/barrel and end-market trends remain tepid, Jefferies expects a 7% EPS rebound in 2017.
Analyst Laurence Alexander commented, "Acetate tow pricing will likely hinder fiber segment EBIT through 2018E, and while methanol prices have improved, Chemical Intermediates weakness should persist into next year. Offsetting these headwinds are share repurchases, cost cuts, propane hedge rolloffs, and market share gains in Advanced Materials. We project an 11% EPS CAGR from 2016E-2018E, and $1.8bn ($12.45/share, or a ~10% yield) in FCF before dividends in 2017E-2018E."
Shares of Eastman Chemical closed at $66.38 yesterday.
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