Ashland's (ASH) fiscal Q2 results were a "mixed bag" relative to expectations as a clear end to downward revisions to earnings before interest, taxes, depreciation and amortization has not yet materialized, Morgan Stanley said in a Monday note.

Fiscal Q2 volumes surpassed Morgan Stanley's expectations, which supports the case for Ashland's base business resilience and the achievability of its growth initiatives, according to the note. The company's commentary on price cost was also in line with the analysts' framework of "modest favorability" in fiscal H2, the note said.

However, the company has to contend with new operational issues, such as those in its manufacturing plants in Calvert City and Hopewell, which have impacted profit by about $30 million in combined costs, the analysts said. They noted that investors will study if these headwinds are recurring or not.

Ashland's guidance is weighted towards fiscal Q4 and is dependent on sustained volume momentum or price outperformance, according to the note.

Morgan Stanley maintained the company's stock rating at equal-weight and lowered the price target to $58 from $63.

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