Ashland increases product prices
On December 8, 2017, Ashland (ASH) announced price hikes on a few of its products in the EMEA (Europe, the Middle-East, and Africa) region. The price increase will be effective on January 1, 2018, or as contracts allow. Below are the details of the price increases:
- Gelcoat products and UPR portfolio will be increased by 100 euros per metric ton
- Epoxy Vinyl ester products will be increased by 150 euros per metric ton
Ashland cited the increase in the cost of raw materials as the primary reason behind the price increase. The impact of the price increase will begin in 1Q18 and could be positive for ASH provided the volumes do not decline. ASH’s reporting year goes from October 1 to September 30. The price increase will impact ASH’s Composites reporting segment. This segment reported revenue of $219 million in 4Q17, implying growth of 35% on a year-over-year basis.
For the week ended December 8, Ashland fell 4.6% and closed at $70.14. ASH underperformed the PowerShares S&P MidCap Low Volatility Portfolio (XMLV), which gained 0.10% for the same period.
Despite the decline in the stock price, ASH is now trading 6.7% above its 100-day moving average price of $65.75, indicating a prevailing bullish trend in the stock. On a YTD (year-to-date) basis, the stock has returned ~31.2%. Analysts are projecting further upside in the stock and have provided a target price of $76.10, which implies a return potential of 8.5% from its closing price as of December 8, 2017.
XMLV had 1.3% of its portfolio in Ashland as of December 8, 2017. XMLV also provides exposure to stocks like Brown & Brown (BRO), Westar Energy (WR), and Rollins (ROL), which had weights of 1.5%, 1.7%, and 1.3%, respectively, as of December 8, 2017.