Ashland stock sees revised target as slower 2025 recovery weighs on earnings forecast

On Monday, Jefferies adjusted the price target for Ashland Inc . (NYSE:ASH) to $92.00, down from the previous target of $105.00, while maintaining a Buy rating on the stock. Currently trading at $70.38, the company appears undervalued according to InvestingPro analysis. The revised target comes as the firm anticipates a slower consumer recovery, particularly in the year 2025. With the stock trading near its 52-week low of $69.25, investors might find additional insights valuable - InvestingPro offers 12 more investment tips for Ashland.

The firm's analyst, Laurence Alexander, noted that the new 2025 estimate aligns with the low end of the management's projected range. The forecast suggests an approximate 8% compound annual growth rate (CAGR) for EBITDA over the next three years, which does not take into account the potential impact of any divestitures.

Alexander highlighted several indicators that could signal Ashland's outperformance in the market. These include achieving over $100 million in sales from both innovation and globalization initiatives, increasing return on net assets (RONA) by more than 550 basis points, and effectively utilizing free cash flow (FCF) for share buybacks or mergers and acquisitions that carry a similar value. The company's strong financial position is evident in its impressive 8% free cash flow yield and healthy current ratio of 2.44, indicating solid liquidity management.

Ashland Inc., a global specialty chemicals company, has been focusing on these strategic areas to bolster its financial performance and enhance shareholder value. The company's efforts to innovate and expand globally, along with strategic capital deployment, are central to its growth strategy.

The new price target reflects the challenges Ashland may face in the near term but also suggests confidence in the company's long-term strategy and value proposition as indicated by the Buy rating. Notable strengths include its 54-year track record of maintaining dividend payments and management's aggressive share buyback program.

The company's stock performance and future financial results will be closely watched by investors as Ashland continues to navigate the evolving economic landscape. For a comprehensive analysis of Ashland's financial health and growth prospects, investors can access the detailed Pro Research Report available on InvestingPro.

In other recent news, Ashland Inc. has made several significant announcements. The company has entered into an agreement to sell its Avoca business, a producer of Sclareolide, a fragrance fixative, to Mane, a leading fragrance and flavors supplier. This transaction is expected to close in the first quarter of 2025. Moreover, Ashland's CFO, J. Kevin Willis, has joined the board of directors at Ingevity (NYSE:NGVT) Corporation. However, Ashland also announced the departure of its Vice President, Finance and Principal Accounting Officer, Eric F. Boni.

In terms of financial highlights, Ashland has maintained its EBITDA midpoint guidance for fiscal year 2025 at $450 million and set an ambitious fiscal year 2027 EBITDA target of $600 million. The company's financial targets include mid-single-digit percentage organic sales growth and up to a 400 basis points improvement in margins.

In the realm of analyst reviews, Mizuho (NYSE:MFG) Securities adjusted its price target for Ashland from $95.00 to $85.00, maintaining an Outperform rating. BMO Capital Markets slightly raised its price target to $84.00, while Deutsche Bank (ETR:DBKGn) reduced its price target to $90. These analyst notes suggest that Ashland's future performance will depend on the successful execution of its strategies and the revival of market demand.

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