Ahead of the Bell: Huntsman

BB&T Capital Markets analyst Frank J. Mitsch said that for every $10 barrel change in the price of crude, Huntsman's raw-material prices change by $140 million annually.

The outlook comes after the Salt Lake City company said price increases helped to curb its third-quarter loss to $20.2 million from $150 million a year earlier.

Meanwhile, Huntsman remains slated to be bought by Hexion Specialty Chemicals Inc. for more than $6 billion.

Mitsch rates Huntsman "Buy" with a $28 price target, suggesting he expects the stock to more than triple over Thursday's $8.30 close.

He expects Huntsman to earn 15 cents per share for the fourth-quarter, 34 cents per share for 2008 and 85 cents per share for 2009.

Analysts polled by Thomson Reuters expect, on average, fourth-quarter earnings of 13 cents per share, 2008 earnings of 39 cents per share and 2009 earnings of 84 cents per share. Analysts typically exclude one-time charges.

Yet despite the rosy outlook on falling crude prices, Huntsman may find itself up against a weak economy, he said,

"We believe that improved pricing and margins due to falling (raw-material prices) will continue to be offset by weak demand," Mitsch said in a note to clients.

Huntsman agreed to be bought by Hexion in July 2007 for about $6.51 billion, but in September Hexion tried to scuttle the deal, citing Huntsman's deteriorating finances. A Delaware judge ordered Hexion to keep the buyout on track, essentially dismissing pleas the combined company would not be solvent.