Arch Chemicals tumbles on DuPont view, downgrade

NEW YORK - Shares of Arch Chemicals Inc. dropped Thursday after rival chemicals maker DuPont Co. forecast a fourth-quarter loss and said it would cut 2,500 jobs amid the global economic slump. A KeyBanc analyst cut his rating on Arch shares to "Sell."

The stock fell $2.78, or 10.6 percent, to $22.43 in midday trading. Shares have lost nearly half their value since peaking at $43.01 a year ago, and recently bottomed at $20.54.

Wilmington, Del.-based DuPont — one of the largest chemical companies in the world — said Thursday it expects to post a loss in the fourth quarter and will lay off 2,500 workers as a severe slowdown in the automotive and construction markets eats away at chemical sales.

KeyBanc Chemical Markets analyst Saul Ludwig downgraded shares of the Norwalk, Conn., company to "Underweight" from "Hold" with an $18 price target, implying he expects the stock to slide 31 percent from Wednesday's $26.21 close.

"Arch Chemicals is a company that has solid core businesses that should continue to grow in the long term; however, the short term has many challenges that we believe will put pressure on profitability and earnings," Ludwig said in a note to clients.

For 2009, Ludwig now expects earnings of $1.80 per share, down from a previous $2.30 per share estimate.

Analysts polled by Thomson Reuters expect, on average, earnings of $2.39 per share for 2009. Analysts typically exclude one-time charges.

"As volumes tumble with weakening demand we should see a sharp increase in unabsorbed overhead, which would lead to an overall reduction in profitability," Ludwig said.

A company representative was not immediately available for comment.

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