On Monday, Redburn-Atlantic adjusted its outlook on BASF SE (BAS:GR) (OTC: OTC:BASFY) shares, lowering the price target to €65.00 from the previous €70.00. The firm maintained a Buy rating on the stock despite recognizing several headwinds facing the company. According to the firm, the company's European upstream margins have seen a sequential decline.
Furthermore, a key segment of BASF's operations, its Nutrition business, has been impacted due to a fire-related shutdown at a significant facility that produces aroma chemicals and vitamins in Europe. The full restart of this facility may be delayed until 2025.
The firm also noted potential challenges in the market dynamics for the automotive OEM industry, which could worsen in the second half of 2024. As a result of these factors, Redburn-Atlantic has revised its EBITDA forecasts for BASF downward by an average of 4% for the years 2024 to 2026. The firm's current year estimate now sits at the lower end of BASF's guidance range of €8 billion to €8.6 billion.
Despite these setbacks, Redburn-Atlantic remains positive about BASF's long-term prospects. The firm's analyst highlighted that the positive transformation thesis for BASF is still intact. Investors and stakeholders can expect further details on portfolio and asset changes at the upcoming Capital Markets Day scheduled for September 26. The revised price target of €65 per share reflects the firm's cautious yet optimistic stance on BASF's future performance.
In other recent news, BASF SE has been under the financial spotlight due to several key developments. Jefferies analyst upgraded BASF's stock from Underperform to Hold, citing an improvement in global upstream chemical product spreads and recovering volumes. The company's full-year guidance was bolstered by these factors, and the stock now offers a dividend yield of approximately 8%, ranking it in the top 4% of its historical performance.
BASF reported a slight increase in volumes and a stable EBITDA before special items in its second quarter 2024 earnings call, despite a 7% decline in sales to €16.1 billion. The company's equity ratio remains strong at 44.5%, and it reaffirmed its full-year outlook with expected EBITDA between €8 billion and €8.6 billion. BASF also anticipates CO2 emissions to be between 16.7 million and 17.7 million metric tons.
The company announced plans to cease production of glufosinate-ammonium by the end of 2024. Despite challenges in the Agricultural Solutions segment, the Chemicals and Industrial Solutions segments reported stronger earnings.
BASF is also implementing cost-saving measures, including site closures and strategic sourcing. These are among the recent developments at BASF, which continues to navigate varying market conditions. The company's next earnings report is scheduled for October, and a Capital Markets Day in September will provide further insights into the company's strategy.
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