J.P Morgan Raises 2011 EPS Forecast For Eastman Chemical

J.P Morgan has raised its 2011 forecast for Eastman Chemical EMN from $7.70 to $7.90. Eastman has brought on its previously idled 300 million pound ethylene cracker in Longview, Texas one quarter earlier than J.P Morgan had modeled, which should add an additional $0.06 per share to its EPS estimate. The January propylene price is yet to settle, but given the tightness in the market it seems that propylene is likely to settle up roughly $0.16 to $0.20 per pound from $0.59 to $0.75 for polymer–grade material benefiting earnings by about $0.15 per share. Eastman produces solvents that move with the price of oil. Oil has increased from $75 per barrel in October to $90 currently, which also should benefit profits. According to J.P Morgan, Eastman is the most inexpensive of the diversified and commodity chemical companies that benefit from the ethane advantage. Eastman is a less well-understood investment play on the profitable difference between making chemicals from natural gas liquids and making chemicals from oil. J.P Morgan has a $105 PT and Overweight rating on EMN EMN closed Thursday at $92.28