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On Wednesday, Jefferies increased its price target for Ashland Inc . (NYSE:ASH) shares to $71 from the previous $68, while reiterating a Buy rating for the company. Currently trading at $52.18, InvestingPro analysis suggests the stock is undervalued, with analyst targets ranging from $50 to $85 per share. The company has demonstrated resilience with a notable 7.88% return over the past week, though it remains significantly below its 52-week high of $102.50. The adjustment follows the firm’s analysis of Ashland’s potential earnings growth, driven by its operational leverage in the coatings and personal care markets. The research firm anticipates that these factors, combined with the company’s focus on innovation, will contribute significantly to Ashland’s earnings in the coming years.
The analyst at Jefferies highlighted the importance of innovation in Ashland’s strategy, suggesting it could not only accelerate growth but also reduce volatility in the company’s earnings. This focus on innovation is expected to potentially increase Ashland’s enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) ratio by 200 to 300 basis points, translating to an additional $25 to $37 per share by 2030. The company’s current EV/EBITDA ratio stands at 9.08x, with a healthy current ratio of 2.32, indicating strong liquidity to support its innovation initiatives.
Jefferies’ outlook for Ashland suggests that reaching a 9x EV/EBITDA multiple within the next 18 months is a conservative target, even when considering a scenario of slow demand growth. This projection underscores the firm’s confidence in Ashland’s ability to grow and expand its market valuation through strategic innovation and market leverage.
The firm’s statement emphasized the long-term value creation that Ashland’s innovation-led strategy could bring, positioning the company for a favorable valuation expansion over the next several years. Jefferies’ analysis indicates that Ashland is well-positioned to capitalize on market opportunities and drive shareholder value through its focused approach to innovation and market dynamics.
Investors and market watchers will likely monitor Ashland’s performance closely, particularly in the areas of coatings and personal care, to see if the company can meet the expectations set by Jefferies’ revised price target and maintain its trajectory towards the predicted EV/EBITDA multiple expansion. The company’s impressive 55-year track record of maintaining dividend payments demonstrates its historical stability. For deeper insights into Ashland’s valuation and growth potential, InvestingPro offers comprehensive analysis through its Pro Research Report, available alongside 8 additional key ProTips that could inform investment decisions.
In other recent news, Ashland Global Holdings reported disappointing second-quarter financial results, with both earnings per share (EPS) and revenue falling short of analyst expectations. The company reported an EPS of $0.99, below the projected $1.14, and revenue of $479 million, missing the anticipated $513 million. Ashland also revised its full-year sales guidance to a range of $1,825 million to $1,900 million. Despite these challenges, Ashland completed a $30 million restructuring plan ahead of schedule and improved its adjusted EBITDA margin to 22.5%. The company remains focused on cost management and productivity improvements, anticipating a stronger fourth quarter. Additionally, Valvoline Inc (NYSE:VVV). announced the appointment of Kevin Willis as its new Chief Financial Officer, effective May 19, 2025. Willis, who previously served as CFO of Ashland Inc., is expected to contribute to Valvoline’s strategic goals with his expertise in capital markets and financial systems integration.
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