Ahead of the Bell: Cabot upgraded by JPMorgan

Shares of Cabot Corp., which makes carbon black, metal oxides and specialty fluids, could see increased activity Friday after an analyst upgraded the shares to "Overweight" from "Neutral" on expectations for stronger earnings.

JPMorgan analyst Jeffrey J. Zekauskas said in a note that the cyclical company's earnings "have probably touched bottom."

Carbon black, which is Cabot's largest business, is a petroleum product _ and thus its price tracks that of crude oil _ used in tire making and as a pigment.

"We believe that the company has reached cyclical bottom and will enter the growth stage given the flattening of crude oil prices," Zekauskas wrote. "Cabot's profitability has been under pressure recently due to an ongoing lag between raw material costs and product price increases in the contracted part of Carbon Black, its largest business."

At the same time, the analyst cut his fourth-quarter estimate of earnings per share to 26 cents from 61 cents "to reflect (the) wider lag between raw material cost inflation and price increases."

Analysts polled by Thomson Reuters expect, on average, earnings per share for the quarter of 42 cents.

Shares closed Thursday trading at $27.54.