Jefferies on Friday increased its price target for Dow Inc. (NYSE:DOW) to $28.00 from $23.00 but left its rating unchanged at Hold. The new target places Dow near its recent market price of $27.16 and corresponds to InvestingPro's Fair Value assessment, indicating that the stock is presently trading close to what that valuation model deems appropriate.
The upward revision from Jefferies follows a fourth-quarter performance in which Dow reported EBITDA of $741 million. That result topped both the consensus estimate of $665 million and Jefferies' own projection of $610 million, providing the immediate underpinning for the price-target adjustment.
Looking ahead, Jefferies noted that Dow is guiding to roughly $750 million of EBITDA in the first quarter. That company guidance sits below the current consensus estimate of $808 million, a sign that end-market conditions remain soft in the near term. Jefferies expects demand to stay muted through the first half of 2026 but anticipates margin improvement during that period, with at least a modest pickup in demand emerging in the second half of the year.
The firm emphasized that recent corporate actions at Dow - including targeted cost reductions, asset rationalization and a fresh restructuring plan - should serve to magnify earnings as and when market conditions turn. Jefferies projects a broader rebound in demand in 2027-2028, a timeline it expects will unlock further operating leverage from those measures.
In quarterly reported results, Dow posted fourth-quarter 2025 earnings per share of -$0.34, beating the forecasted -$0.51. Revenue for the quarter was $9.46 billion, narrowly below the anticipated $9.47 billion. While the EPS beat represents a positive surprise, the company continues to face investor concern tied to broader market headwinds and ongoing strategic shifts within the business. The report did not cite any material mergers or acquisitions, and analyst coverage did not produce notable upgrades or downgrades in response to the release.
Summary
Jefferies raised its price target for Dow to $28 while keeping a Hold rating. The firm highlighted stronger-than-expected fourth-quarter EBITDA, company guidance that is below consensus for Q1, and expected margin improvement into 2026 supported by cost and restructuring actions. A broader demand rebound is anticipated in 2027-2028.
Key points
- Jefferies increased its price target from $23 to $28 but maintained a Hold rating; the new target aligns with current trading around $27.16 and InvestingPro's Fair Value.
- Dow reported Q4 EBITDA of $741 million, above both consensus ($665 million) and Jefferies' projection ($610 million).
- Company guidance suggests Q1 EBITDA near $750 million, below consensus of $808 million; Jefferies expects margin improvement through 1H 2026 and a broader recovery in 2027-2028.
Risks and uncertainties
- Near-term demand weakness: First-quarter guidance below consensus indicates continued soft end-market trends that could pressure revenue and margins in chemicals and industrial sectors.
- Execution of restructuring and cost actions: The anticipated earnings amplification depends on successful implementation of asset rationalization and restructuring plans, affecting industrial and manufacturing cash flows.
- Timing of broader market recovery: Jefferies' expectation of a rebound in 2027-2028 introduces timing risk for investors seeking earlier upside; sectors sensitive to commodity and manufacturing demand are particularly exposed.
These developments form the latest public updates on Dow Inc.'s operating performance and near-term outlook.