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Eastman Chemical Company (EMN - Analyst Report) announced that it has entered into a $10 million research agreement with North Carolina (NC) State University to conduct cutting-edge research in chemistry, materials science and other scientific disciplines. According to the agreement, Eastman will establish the Eastman Innovation Center (EIC) laboratory, located in Centennial Campus, which is NC State’s nationally recognized research campus.

As per Eastman, the deal will enable them to come up with unique and innovative technologies and materials, which will penetrate the market more easily and promptly than the traditional approach. On the other hand, NC State University believes that their students will get numerous opportunities to cater to the real-world problems in chemistry and material sciences by working with the expertise of Eastman.

The North Carolina State University has also established one common point of contact for Eastman to coordinate activities with both academic and administrative units. With this agreement, the scientists of the University along with Eastman will have access to each other’s labs.

Located in the heart of Raleigh, North Carolina State University is the largest school in North Carolina, offering bachelor degrees in 106 disciplines, master`s degrees in 104 fields and doctorate degrees in 61 fields.

Eastman is a global specialty chemicals company. In July 2012, it took over Missouri-based chemical company Solutia under a cash and stock deal worth roughly $4.8 billion (including Solutia debt). The acquisition is expected to significantly accelerate the company's growth while offering lucrative opportunities in AsiaPacific.

Hefty costs associated with the takeover dragged down Eastman's profit in the second quarter of 2012. The company reported earnings (from continuing operations) of $1.26 per share in the quarter, down 17% from $1.51 a year ago.

Excluding costs related to the acquisition of Solutia Inc. and a one-time gain, the Tennessee-based chemicals maker earned $1.40 a share, which outperformed the Zacks Consensus Estimate of $1.34. Profit (as reported) from continuing operations dropped 19% to $177 million.

Eastman Chemical continues to expect double-digit earnings growth in 2012 due to the acquisition of Solutia. The company retained its adjusted earnings forecast of $5.30 a share for the year, which is higher than the current Zacks Consensus Estimate of $5.20.

We believe that Eastman Chemical is well positioned to benefit from the synergies of its Solutia acquisition in the second half of 2012. The company also stands to benefit from business restructuring, cost-cutting measures and increased capacity additions.

The company competes with The Dow Chemical Company (DOW - Analyst Report) and E. I. du Pont de Nemours and Company (DD - Analyst Report). It currently holds a short-term Zacks #3 Rank, which translates into a short-term (1 to 3 months) Hold rating.

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