Huntsman shares rally after 2Q guidance raised

The stock rose $1.04, or 8.7 percent, to $13 Thursday.

The Salt Lake City-based company said Wednesday it expects adjusted earnings, before income taxes, depreciation and amortization--a measurement commonly known as EBITDA--to jump approximately 10 percent over the first quarter.

Despite a $75 million rise in raw material, energy and other costs during the second quarter, as well as the drop in the U.S. dollar's value, the company said it was able to boost prices and sales volumes.

"Our results in the month of June were stronger than those recorded in May, which were stronger than those recorded in April," President and Chief Executive Peter Huntsman said in a release. "We expect this trend to continue into the second half of 2008."

Meanwhile, net debt was about $4.3 billion as of June 30, compared with debt of about $4.1 billion as of June 30, 2007, the company reported.

Jefferies & Co. analyst Laurence Alexander said the guidance would be "incrementally positive for the shares."

He raised his price target to $12 from $11, and kept a "Hold" rating.

The outlook comes as Huntsman is embroiled in a buyout battle with a unit of Apollo Management LP. Hexion Specialty Chemicals Inc. had previously planned to buy Huntsman in a $6.5 billion deal, but backed out last month citing Huntsman's slumping finances. A Delaware court is now considering the matter.

Huntsman is now more likely to obtain a $325 million deal break-up fee, Alexander said.