Nomura Securities Upgrades Eastman Chemical (EMN) to Buy
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Nomura Securities upgraded Eastman Chemical (NYSE: EMN) from Neutral to Buy with a price target of $98.00 (from $85.00).
Analyst Aleksey Yefremov commented, "We think Eastman’s high and rising cash generation is not recognized, while major risks that have kept us on the sidelines since December are now reflected in the share price. Our bullish thesis is based on: (1) elevated adj. 2015E FCF yield of 8.5%, which does not reflect the upgraded quality of Eastman’s portfolio; (2) we expect management to clearly communicate the shift from M&A/debt paydown to share repurchases/capex; (3) better outlook for propane feedstock should lift earnings in 2015-17, accelerating as hedging expires in 2016; and (4) capacity cuts in cigarette filter tow (Fibers) limit pricing downside. We think the recent surge in the shares of competitor Celanese (CE) also highlights value hidden within EMN."
Shares of Eastman Chemical closed at $80.48 yesterday.
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