J.P. Morgan Sees Strong Upside In Shares of Ashland (ASH)

J.P.Morgan Chase & Co. sees strong upside in shares of Ashland Inc. ASH. It has a $65 price target and Overweight rating on the shares. In the research note sent to clients, J.P. Morgan writes, "Ashland’s sales and margin data for the first month of 4Q:F10 (ends September) brought no changes to our EPS forecast for the current quarter or for the out years, but did result in adjustments to the expected business segment performance in the quarter. Valvoline margins are being affected by a time lag between pricing initiatives and base oil cost increases: accordingly, we reduced our Valvoline profit expectation for 4Q:F10 by ($2M). Distribution gross margin reflects recent price increases and, assisted by good sales volumes, would likely result in higher profits: we increased our operating income forecast for Distribution by $4M in 4Q:F10. We adjusted down our profit forecast for the Performance Materials segment by ($1M) to account for higher overhead expenses to support increased production volumes. We maintain our 4Q:F10 EPS forecast of $1.07. We maintain our F2011 and F2012 EPS projections of $4.50 and $5.00. We rate Ashland shares Overweight." Shares of Ashland lost 38 cents yesterday to close at $47.82.