J.P. Morgan Raises Dow Chemical 2010 EPS

Dow Chemical Company

reported 3Q:10 EPS 30% in excess of consensus expectations and yet the stock traded lower, J.P. Morgan reports. The difference between consensus and reported results can be attributed entirely to outperformance in Dow's Basic Plastics unit. “There is no additional positive inference to be drawn concerning 2011 EPS because of the commodity nature of the division, the movements of raw material prices forward and backward, and the generally low rate of ethylene global capacity utilization,” J.P. Morgan writes. “Accordingly, we are raising our EPS forecast for 2010 from $1.75 to $1.85 (to factor in the results of the strong quarter), but our projections for 2011 and 2012 remain unchanged at $2.30 and $3.10, respectively.” Dow currently trades at $30.86.