JP Morgan analyst Jeffrey J. Zekauskas downgraded the rating for Eastman Chemical Company (NYSE:EMN) from Overweight to Neutral and cut the price forecast from $112.00 to $76.00.

On April 25, the company reported first-quarter adjusted EPS of $1.91, beating the $1.89 estimate, while sales of $2.29 billion missed the $2.33 billion estimate.

For the second quarter, Eastman anticipates adjusted EPS of $1.70-$1.90, below the consensus estimate of $2.18.

The company expects a slight sequential volume increase across its markets in the second quarter, but it is less than typical due to trade uncertainty.

Additionally, second-quarter earnings are expected to be negatively impacted by U.S.-China tariffs and increased planned maintenance.

The analyst remarks that typically, Eastman sees a second-quarter volume and earnings increase due to seasonal construction.

Zekauskas writes that tariffs haven’t directly impacted Eastman’s operations because customers are currently using material already within the country.

Further, the analyst says that sustained difficult trade conditions could increase near-term earnings risk and diminish longer-term growth prospects.

The analyst estimates the company’s specialty polymer sales to China to be ~$340 million, generating ~$100 million in EBITDA.

While Eastman forecasts $1.2 billion in 2025 cash flow from operations, this may be aggressive given the $167 million cash use in the first quarter, adds the analyst.

Consequently, the analyst lowered the EPS estimate to $7.40 (from $8.45) for 2025 and $7.80 (from $9.00) for 2026.

Considering current conditions, a further ~$1.00/share reduction to the base case 2025 earnings range ($7.00-$7.75) seems appropriate, adds the analyst.

Zekauskas adds that this could potentially reflect less pressure on the second half of 2025 filter tow earnings as destocking effects ease.

Price Action: EMN shares are down 0.84% at 475.20  at the last check Monday.

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