On Tuesday, Mizuho (NYSE:MFG) Securities adjusted its outlook on Ashland Inc . (NYSE: NYSE:ASH), a company specializing in consumer-facing ingredients and additives. The firm reduced the stock's price target from $95.00 to $85.00 but continued to recommend the stock with an Outperform rating. Currently trading at $73.75, near its 52-week low, InvestingPro analysis suggests the stock is slightly undervalued.
Ashland recently held an investor day where the company set three-year targets, aiming for mid-single-digit percentage organic sales growth and up to a 400 basis points improvement in margins. The company's focus is on globalizing four high-value areas and introducing seven new product platforms, which are anticipated to generate above-market growth. With a strong financial health score and a 54-year track record of consistent dividend payments, the company demonstrates solid fundamental strength.
Despite experiencing a weaker than expected December quarter in 2024 due to maintenance downtime and sluggish demand in Europe and China, Ashland is expected to see a recovery in the March quarter of 2025. The company has maintained its EBITDA midpoint guidance for fiscal year 2025 at $450 million, even with the slow start to the year.
Furthermore, Ashland has set a fiscal year 2027 EBITDA target of $600 million, surpassing the initial Bloomberg consensus estimate of $550 million. Mizuho's revised price target reflects a recalibration to account for the lower prevailing multiples within the Materials sector, while still endorsing the stock's strong potential. For deeper insights into Ashland's valuation and growth prospects, InvestingPro subscribers can access 12 additional exclusive tips and comprehensive financial analysis.
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