Ashland raises prices on Purelam products
On July 9, Ashland (ASH) announced a price hike for its Purelam and Purelam Fastcure line of products, effective July 23. The price increase is in the range of 2%–9%. Ashland cited the increase in raw material costs as the primary reason for the price increase.
Purelam is a polyurethane adhesive system used for bonding packaging materials. It has been approved by the FDA for packaging snacks, chocolates, cheese, meat, and more. The price increase could be positive for Ashland since it could help improve its revenue, provided the volumes don’t drop. The impact of the price increase will be more visible in Ashland’s fourth-quarter earnings.
The upward revision of ASH’s target price by JPMorgan (JPM) helped Ashland stock rise 3.3% and close at $81.18 for the week ended July 13. The stock closed at an all-time high and traded at 9.7% above its 100-day moving average of $74.02, which indicates an upward trend. On a YTD (year-to-date) basis, Ashland stock has risen 14%. However, investors should be cautious since Ashland’s RSI (relative strength index) is at 67 and moving very close to an overbought position.
Ashland has outperformed the Invesco Russell MidCap Pure Value ETF (PXMV), which declined 0.4% in the week. PXMV invests 1.3% of its portfolio in Ashland. It also provides exposure to Dish Network (DISH) and CNA Financial (CNA) with weights of 1.1% and 1.1%, respectively, as of July 13.