Wells Fargo Cuts Valuation Range on Dow Chemical (DOW), Electronic and Construction Markets Remain Sluggish
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Price: $31.07 +2.34%
Rating Summary:
15 Buy, 14 Hold, 2 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
15 Buy, 14 Hold, 2 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Wells Fargo is maintaining its Market Perform rating on shares of Dow Chemical (NYSE: DOW), while lowering its price valuation range from $30-$32 to $28-$30.
The new valuation range is due to the company's new full year earning estimates of $2.55 per share and $2.75 per share for FY11 and FY12, which are lower than its previous estimates of $2.65 and $3.00. Wells Fargo highlights the new estimates reflect weakness in the electronics and construction markets.
The firm believes shares of DOW will face some of the headwinds that Du Pont's (NYSE: DD) management team recently highlighted. This means a solid recovery in the shares price is very unlikely until mid-2012.
Management is currently in phase 3 of its cost cutting growth profile. Wells Fargo notes the third phase consists of encompasses productivity, gross margin growth and reliability while scaling.
An analyst at Wells Fargo comments, "While we recognize Dow's efforts in becoming more specialty oriented, we would be remiss in not recognizing that commodities are still a large driver of results. As such, current valuation appears fair with the uncertain economic backdrop. We note that leverage is above the peer group at 2.0x net debt-to-EBITDA, but the dividend yield of 3.8% is certainly appealing."
For an analyst ratings summary and ratings history on Dow Chemical click here. For more ratings news on Dow Chemical click here.
Shares of Dow Chemical closed at $26.36 yesterday.
The new valuation range is due to the company's new full year earning estimates of $2.55 per share and $2.75 per share for FY11 and FY12, which are lower than its previous estimates of $2.65 and $3.00. Wells Fargo highlights the new estimates reflect weakness in the electronics and construction markets.
The firm believes shares of DOW will face some of the headwinds that Du Pont's (NYSE: DD) management team recently highlighted. This means a solid recovery in the shares price is very unlikely until mid-2012.
Management is currently in phase 3 of its cost cutting growth profile. Wells Fargo notes the third phase consists of encompasses productivity, gross margin growth and reliability while scaling.
An analyst at Wells Fargo comments, "While we recognize Dow's efforts in becoming more specialty oriented, we would be remiss in not recognizing that commodities are still a large driver of results. As such, current valuation appears fair with the uncertain economic backdrop. We note that leverage is above the peer group at 2.0x net debt-to-EBITDA, but the dividend yield of 3.8% is certainly appealing."
For an analyst ratings summary and ratings history on Dow Chemical click here. For more ratings news on Dow Chemical click here.
Shares of Dow Chemical closed at $26.36 yesterday.
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