On Thursday, JPMorgan (NYSE:JPM) revised its stance on Ashland Inc . (NYSE:ASH) stock, upgrading it from Underweight to Neutral. The financial institution adjusted the price target to $89.00, a slight decrease from the previous $90.00 target. This change in rating and price target reflects a new valuation approach and modified earnings expectations.
The upgrade to Neutral was based on a sum-of-the-parts valuation method. JPMorgan's assessment of Ashland's specialty businesses applied an 11.5x multiple of EBITDA, while the commodity Intermediates and Solvents operation was valued at a 6.5x EBITDA multiple. The firm established a December 2025 price target for Ashland, taking into account the company's future financial performance.
JPMorgan's new price target represents a modest reduction from the prior December 2024 target. This adjustment is attributed to lower projected EBITDA figures. For the fiscal year 2025, the EBITDA forecast has been set at $500 million, a slight decrease from the previous estimate of $507 million.
The valuation is focused on the anticipated performance in 2025, as the dynamics for fiscal year 2026 are considered too uncertain at this point, given current global economic conditions and specific challenges faced by Ashland in its Life Sciences and Specialty Additives divisions.
The EBITDA estimates for the near term were also revised. For fiscal year 2024, which ends in September, the EBITDA is now expected to be $465 million, down from the earlier forecast of $472 million.
This is in contrast to the $460 million EBITDA projected for fiscal year 2023 and the $589 million EBITDA reported for fiscal year 2022. These projections serve as a basis for the updated valuation and rating of Ashland's stock.
In other recent news, Ashland Inc. has experienced a series of significant developments. Wolfe Research adjusted the company's share target to $110, citing a lowered fiscal year 2024 outlook and concerns regarding uncertainties in the Life Sciences sector. The company's ongoing asset sales and portfolio rationalizations have also raised investor interest.
Argus maintained a Buy rating on Ashland and increased the stock's price target to $118, indicating improving demand across most of Ashland's markets. BMO Capital Markets also raised Ashland's price target to $105, acknowledging the company's successful alignment of production with customer demand.
Ashland announced a 5% increase in its quarterly cash dividend, reflecting its financial health. The company also expanded its board with the appointment of Ashish K. Kulkarni, CEO of Kebotix, preparing for potential director retirements.
Furthermore, Ashland has entered into an agreement to divest its nutraceuticals business to Turnspire Capital Partners LLC, as part of focusing on its core portfolio. These are recent developments in Ashland's ongoing business evolution.
InvestingPro Insights
Following JPMorgan's recent update on Ashland Inc., it's worth noting that the company has been recognized for its strong shareholder return policies. According to InvestingPro Tips, Ashland has not only raised its dividend for 5 consecutive years but has also maintained dividend payments for an impressive 54 consecutive years. This demonstrates a consistent commitment to returning value to shareholders over the long term. Furthermore, the company's management has been actively engaged in share buybacks, which can often signal confidence in the company's future and support for the stock price.
InvestingPro Data also reveals that Ashland has a market capitalization of $4.1 billion with a P/E ratio of 28.2. While the company's revenue has seen a decline of 8.59% over the last twelve months as of Q3 2024, it has maintained a gross profit margin of 27.13%. Moreover, despite recent price volatility, with a 1-week total return of -14.93%, Ashland's stock is trading at 79.75% of its 52-week high, and analysts have set a fair value target at $110, which is above the current price of $81.74. These figures suggest that Ashland may be positioned for a potential rebound, especially if it continues to deliver on its shareholder-friendly financial policies.
For those seeking a deeper analysis, there are additional InvestingPro Tips available that could provide further insight into Ashland's financial health and stock potential.
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