Dow's stock should be bought, J.P. Morgan says, as it offers an attractive dividend and the potential to get a nice, delayed boost from higher oil prices.
Dow Inc. shares should be bought, J.P. Morgan analyst Jeffrey Zekauskas says, as the specialty chemicals and plastics company’s stock offers an attractive dividend, a strong balance sheet and the potential to get a nice, delayed boost from higher oil prices.
Zekauskas raised his rating on Dow’s stock to overweight, after being at neutral for the past year. His $55 stock price target implies 9.5% upside from Friday’s closing price of $50.25. He noted that as of Friday’s close, the stock’s dividend yield was 5.6%, which compares with the yield for the Materials Select Sector SPDR ETF XLB of 2.1% and the implied yield for the S&P 500 index SPX of 1.6%.
He also believes Dow’s stock should benefit from the recent rise in oil prices, which he said tends to lift profits for North American companies that use natural gas liquids as feedstock, like Dow.
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