Why Did Longbow Just Upgrade A. Schulman?

Improving macro conditions in EMEA and a resilient USCAN may be the key drivers for organic sales growth and better margin expansion for A Schulman Inc SHLM investors, as equities researchers at Longbow Research commented on Wednesday that the firm upgraded the stock to Buy from Neutral.

A. Schulman has experienced growth in C4Q15 with an "upbeat outlook" ahead in 2016.

Past Growth Paves Way For Positive 2016

"Positive growth seen in EMEA demand in C4Q15 and an upbeat outlook for 2016 driven by automotive and packaging demand, combined with stronger than anticipated demand in North America suggests better revenues and margins for SHLM's largest divisions, representing 51 percent and 34 percent of overall sales respectively," the firm noted.

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Longbow's optimistic research note coincides with a Wednesday open price of $28.96 for A. Schulman.

The firm sees opportunities to "beat-and-raise" ahead. "Positive macro and end market dynamics combined with strong internal execution may drive SHLM's F2016 performance that can exceed management's initial guidance, potentially starting in F1Q16," Longbow noted.

Volume leverage might also come as a "surprise" to the upside.

"Growth in SHLM's Engineered Plastics business in USCAN should be leveraged by increased insourcing of tolled business leading to margin expansion that may exceed investor expectations," the firm commented.

A. Schulman has a 50-day moving average of $31.77 and a 200-day moving average of $34.97. The company has a one-year low of $28.54 and a one-year high of $48.96. The company's market capitalization is of $845.49 million.