Ashland’s price increase
On May 24, Ashland (ASH) announced that it will increase maleic anhydride prices by $0.06 per pound. The price increase will be effective on June 7 or as the contract allows. The price increase will likely impact the North American region. Ashland said that the price increase was due to higher raw material prices and constraints in maleic anhydride supplies.
The price increase could help Ashland improve its revenues if the volumes don’t decline. The impact of the price increase will be more visible in the fiscal third quarter. Ashland reported revenues of $974 million in the fiscal second quarter—an increase of 21% compared to the previous year.
Stock price update
Ashland’s stock price increased 1.6% and closed at an all-time high of $79.02 for the week ending May 25. As a result, the stock traded 9.8% above the 100-day moving average price of $72.0, which indicates an upward trend in the stock. On a year-to-date basis, the stock has gained 11.0%. Analysts continue to be bullish on the stock. Analysts recommended a target price of $83.5, which implies a return potential of 5.9% from the closing price as of May 25. However, Ashland’s relative strength index is at 76, which suggests that the stock has temporarily moved into the “overbought” position.
Ashland outperformed the PowerShares Russell Midcap Pure Value Portfolio (PXMV), which rose 0.1% for the week. PXMV has invested 1.6% of its portfolio in Ashland. The fund also provides exposure to First Solar (FSLR), Ralph Lauren (RL), and Transocean (RIG) with weights of 2.2%, 1.6%, and 1.9%, respectively, on May 25.