Jefferies Cuts Price Target on Ashland (ASH) Following Meeting with Lamar Chambers

Jefferies is maintaining its Buy rating on shares of Ashland Inc. (NYSE: ASH), but is reducing its price target from $67 to $65 following meeting with CFO Lamar Chambers.

The firm doesn't believe that Performance Materials will exit the portfolio and anticipates that management will find new ways to optimize the last severely cyclical business in its portfolio. Jefferies predicts that this will lead to more joint ventures and that the segment will need to see a 25 percent recovery in volume to maintain margin growth.

The company currently has $392 million left on their buyback plan, but the firm states that any buybacks are very opportunistic. Jefferies forecasts that ASH will generate a free cash flow rate of 9 percent before dividends.

Jefferies is lowering its 2011 EPS estimate from $3.55 to $3.53 while increasing its 2012 estimate from $5.00 to $5.40.

For more ratings news on Ashland Inc. click here and for the rating history of Ashland Inc. click here.

Shares of Ashland Inc. closed at $44.14 yesterday.

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