We have maintained our Neutral recommendation on chemicals
). While the company should benefit from Solutia acquisition and
capacity additions this year, a weak European market remains as
Eastman Chemical's first-quarter 2013 results, reported on Apr
25, were a mixed bag with adjusted earnings topping the Zacks
Consensus Estimate while sales missing the same. Revenues rose at
a healthy double-digit clip, driven by the contributions of
Solutia acquisition. The company reaffirmed its earnings guidance
for the full year.
Eastman Chemical's diversified chemical portfolio, along with its
integrated and diverse downstream businesses remains its
strength. It also benefits from business restructuring and
The acquisition of Solutia represents a major step in Eastman
Chemical's strategy to boost its foothold in the emerging
markets, especially in Asia Pacific. Factoring in the synergies
of Solutia acquisition, the company expects a 17%-19% annualized
rise in earnings in 2013.
Eastman Chemical should also benefit from increased capacity
additions. The company is also making progress in its growth
initiatives through its joint venture in China for a 30,000-ton
acetate tow manufacturing facility, which is expected to come
online in third-quarter 2013.
However, uncertainty regarding the timing of a recovery in Europe
remains a concern. Automobile as well as building and commercial
construction markets remain soft in Europe.
Moreover, Eastman Chemical remains exposed to volatility in raw
material costs and weak pricing across specific markets.
Eastman Chemical currently holds a Zacks Rank #3 (Hold).
Other Stocks to Consider
Other companies in the chemical industry that are worth
Shin-Etsu Chemical Co., Ltd.
). While Shin-Etsu Chemical retains a Zacks Rank #1 (Strong Buy),
both Celanese and FMC hold a Zacks Rank #2 (Buy).
CELANESE CP-A (CE): Free Stock Analysis
EASTMAN CHEM CO (EMN): Free Stock Analysis
FMC CORP (FMC): Free Stock Analysis Report
SHIN-ETSU CHEM (SHECY): Get Free Report
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