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Ashland Products: Update on the Price Increase

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Ashland increases a few product prices

On June 11, Ashland (ASH) announced the price increase for 1-4 butanediol and several derivative products. The price hike will be effective on July 1 or as the agreement allows. The price hikes will only impact the Americas region. Ashland is increasing 1-4 butanediol prices for the second time in 2018.

The prices of 1-4 butanediol (BDO), BLO® butylrolactone, n-methyl-pyrrolidone (NMP), tetrahydrofuran (THF), n-hydroxyethyl-2-pyrrolidone (HEP), 2-pyrrolidone, n-cyclohexyl-2-pyrrolidone (CHP), and specialty solvents will increase by $0.07 per pound or $0.15 per kilogram. The impact of the price increase could be positive for Ashland. The increase would help improve the revenues—assuming that the volumes don’t decline. The increase will likely be more visible in Ashland’s third-quarter revenues. In the second quarter, Ashland reported sales of $974.0 million—an increase of 21.0% compared to the previous year.

Stock price

Ashland’s stock price declined 2.2% and closed at $78.23 for the week ending June 15. Despite a decline in the stock price,  the stock traded 7.5% above its 100-day moving average price of $72.57, which indicates an upward trend in the stock.

On a YTD basis, Ashland stock has gained 9.9%. Analysts continued to be bullish on the stock and maintained the target price at $84.50, which implies a return potential of 8.0% from its closing price on June 15.

Ashland’s RSI (relative strength index) at 55 suggests that the stock isn’t overbought or oversold.

Ashland underperformed the Invesco Russell MidCap Pure Value ETF (PXMV) and declined 0.2% for the week. PXMV invests 1.6% of its portfolio in Ashland. The fund also provides exposure to TCF Financial (TCF), PacWest Bancorp (PACW), and CNA Financial (CNA) with respective weights in 1.5%, 1.3%, and 1.3% on June 15.

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