) to buy from neutral.
Analyst Kevin McCarthy says Eastman blew out the first quarter as there was broad strength among its specialty businesses, post-restructuring. He notes margins improved in all segments.
He still harbors concerns but thinks Eastman shares now offer an attractive compensation despite prospects for slower economic growth. He thinks earnings per share improvement is sustainable.
Unlike deeply cyclical commodity names, McCarthy believes Eastman's portfolio offers better shelter from volatile feedstock movement. He raises his $4.60 2005 earnings per share estimate to $6.45, his $4.90 2006 earnings per share estimate to $6.75, and his $60 target to $63.