Opinions
Jennifer Radman
Eastman Chemical
EMN-N
COMMENT
Aug 10, 2016
Stock price when the opinion was issued
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(A Top Pick May 8/17. Up 25%.) Still has lots of upside potential, but is coming hard up against technical resistance, so is watching to see if it will break out. There is enough potential that it should be able to do it. Needs another $2 or $3 on the upside, and then we get a clear technical break out, and then it would be okay to Buy. Right now, he would be cautious.
Just delivered a beat in their quarterly report last week, but the stock actually got hit. Days later, Bank of America upgraded EMN and the stock rebounded. He recommended this in June because there's a long-term shortage of the chemicals they supply. Also, EMN has developed a technology that makes recycled plastic a lot more lucrative. EMN raised its full-year forecast by a strong 50 cents. It trades at 13x earnings and should be $5-6 higher.
A really volatile name in some ways. Compared to other chemical companies, they have been pushing really hard to get into more of the specialized product to get a higher margin and more diversification, but are still exposed to more of the commodity type parts of the market. A lot of the sales are going into Asia, which is where you are seeing some weakness. There is a lot of leverage in the model, where there is not a lot of control. She is on the sidelines for this.