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Huntsman (HUN) Lowered To 'Neutral' By UBS, PT Raised

 January 10, 2013 02:50 PM

(By Balachander) Huntsman Corp. (NYSE: HUN) shares were lowered to "neutral" From "buy" by UBS based on view that the company's stock price has now approached fair valuation.

"The current excess return of negative 3% versus our $18 target price is consistent with a Neutral rating for the stock," the brokerage said. "We are increasing our target price to reflect an updated estimate of normal earnings to $1.70/sh from $1.50/sh." UBS increased target $2 on higher normalized EPS.

UBS expects the Polyurethane segment to report about $180 million in EBITDA, in 4Q, down from $239 million reported in the 3Q on seasonally weaker MTBE margins.

[Related -Huntsman Corporation (HUN): Needs A Perfect Trip To Hit Goldman’S $29]

The brokerage anticipates that EBIT margins for MDI will be down only slightly from 3Q levels and will be near $0.355/lb.

UBS reduced its 2012 EPS to $2.23 from $2.35 and 2013 EPS estimate to $1.90 from $2.05 on lower earnings expectations for Pigments.

"Our prior assumption was that TiO2 prices would be down $0.10/lb in 4Q, but it appears that actual prices were down $0.20/lb," the brokerage said. "We do not anticipate a recovery in the soft market conditions for TiO2 until the third quarter of 2013 at the earliest."

Huntsman is a manufacturer of differentiated chemicals. Its operating companies manufacture products for industries, including chemicals, plastics, automotive, aviation, textiles, footwear, paints and coatings, among others.

The stock, which has been trading in the 52-week range of $10.13 to $18.29, traded 1.43 percent lower at $17.92 on Thursday.

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