Ashland: Stabilizing Fundamentals, Portfolio Streamlining, and Activist Upside Support Buy Rating

Ashland, the Basic Materials sector company, was revisited by a Wall Street analyst today. Analyst John McNulty from BMO Capital maintained a Buy rating on the stock and has a $71.00 price target.

John McNulty has given his Buy rating due to a combination of factors that, in his view, signal stabilization and improving prospects for Ashland. He notes that while first-quarter results were slightly below broader market expectations on sales and EBITDA, they were in line with his own forecasts and the earnings miss was limited primarily to the Intermediates segment. Importantly, overall margins held up better than anticipated thanks to cost-reduction efforts, favorable product mix, and portfolio optimization, and the company’s full-year EBITDA guidance was only modestly tightened and remains essentially consistent with consensus estimates. McNulty also highlights that adjusted EPS outpaced both his model and the Street’s expectations, supported in part by lower interest expense, reinforcing the view that operational and financial performance is beginning to stabilize.
At the segment level, McNulty points to solid momentum in Life Sciences, where both revenue and EBITDA grew and pricing has remained largely stable, as well as ongoing strength in select Personal Care subcategories such as bio-functional actives and microbial protection. Although certain areas like coatings and industrial end markets, particularly in the U.S. and China, remain soft, the Specialty Additives business delivered better-than-expected profitability due to disciplined cost control, and corporate costs were slightly better than forecast. Looking forward, McNulty expects Ashland to outpace its peers as the company’s portfolio streamlining allows greater emphasis on cost efficiency and innovation, with demand set to benefit from a gradual housing recovery and new customer wins in personal care. He also sees potential upside from activist involvement, which could enhance strategic focus and execution, and believes that clearer growth visibility into fiscal 2026–2027 supports both earnings trajectory and valuation, justifying his Buy recommendation.

McNulty covers the Basic Materials sector, focusing on stocks such as TRONOX, Ashland, and Air Products and Chemicals. According to TipRanks, McNulty has an average return of 2.8% and a 53.16% success rate on recommended stocks.

In another report released on January 30, UBS also maintained a Buy rating on the stock with a $70.00 price target.