Jefferies raises Eastman Chemical share price target on positive outlook By Investing.com

On Monday, Jefferies updated its evaluation of Eastman Chemical (NYSE:), raising the share price target to $125 from the previous $102, while keeping a Hold rating on the stock. The firm highlighted several factors contributing to a positive outlook for Eastman Chemical over the coming years.

The analysis by Jefferies suggests that Eastman Chemical is poised for above-average earnings per share (EPS) growth, with expectations of higher margins and improved return on invested capital (ROIC) through the next three years. The firm’s 2024 outlook for Eastman is seen as conservative, especially regarding volume projections.

Eastman Chemical is also expected to benefit from significant operating leverage due to restocking in key industries such as durables, electronics, and packaging. Jefferies points out that this leverage could positively impact the company’s performance.

Investments in circularity, which refer to the processes of recycling and reusing materials, are anticipated to add approximately $3.50 to Eastman’s EPS by the years 2029-2030. These investments are part of the company’s long-term strategic initiatives.

Finally, Jefferies projects a free cash flow (FCF) of $7.50 per share for Eastman Chemical in the years 2024 to 2026. This strong cash flow is expected to support a dividend yield of 3.7% and could allow for up to approximately 20% of the company’s stock to be repurchased or for similar mergers and acquisitions activities. The updated price target reflects these factors and the firm’s confidence in Eastman Chemical’s financial strategy and market position.

InvestingPro Insights

In line with Jefferies’ positive outlook on Eastman Chemical, certain metrics from InvestingPro reinforce the company’s strong position. Eastman Chemical’s management has been actively engaging in share buybacks, signaling confidence in the company’s value (InvestingPro Tip). Additionally, the company has an impressive track record of raising its dividend for 14 consecutive years, providing a reliable income stream for investors (InvestingPro Tip).

From a financial standpoint, Eastman Chemical’s market capitalization stands at $11.24 billion, with a P/E ratio of 12.3, which suggests that the stock is trading at a reasonable valuation compared to its near-term earnings growth (InvestingPro Data). The company also boasts a dividend yield of 3.39% as of the latest data, which is…