Deutsche Bank has reconfigured its recommendations on a swath of European chemicals and ingredients stocks, upgrading three companies, lowering ratings on two others and revising multiple price targets as it adjusts to what it terms post-Middle East conflict market realities, analyst Virginie Boucher-Ferte said.
The brokerage shifted eight names across the sector. BASF, Brenntag and Umicore were promoted from "hold" to "buy." AkzoNobel and Givaudan were trimmed from "buy" to "hold." Wacker Chemie was moved up to "hold" from "sell." Croda retained its "hold" rating, while dsm-firmenich and Kerry Group kept their "buy" stances.
Deutsche Bank also updated its price targets alongside the rating moves. AkzoNobel's target was cut to c55 from c68, and Givaudan's target was reduced to CHF3,000 from CHF3,750. By contrast, BASF's target was increased to c55 from c45, and Brenntag's target rose to c57 from c46.
Other target revisions included Umicore e2 80 99s target rising to c17.20 from c16, Wacker Chemie's target increasing to c68 from c59, and Croda's target being trimmed to 3,000p from 3,100p while keeping the "hold" rating. dsm-firmenich remained at "buy" with its target lowered to c75 from c80, and Kerry Group stayed at "buy" with a target cut to c85 from c91.
Boucher-Ferte explained the rationale behind the moves in direct terms. "We anticipate that this conflict will have relatively long-lasting consequences for European Chemical companies, both negative (cost and demand headwinds) and positive (reduced oversupply and competitive pressures), even if a resolution were to occur in the near future," she wrote.
The analyst was explicit about the limits of the bank's visibility on how the situation will evolve. "We acknowledge the significant uncertainty surrounding the duration and evolution of the ongoing Middle East conflict," she noted. "At this stage, it is impossible to definitively assess the net impact of the situation, and a wide range of outcomes remain possible."
Despite the uncertainty, Deutsche Bank said it views a rapid reversion to prior market conditions as unlikely. "We view a swift normalisation as improbable," Boucher-Ferte wrote, a view that influenced the decision to move AkzoNobel and Givaudan down to "hold" from "buy," and to lift Wacker Chemie from "sell" to "hold."
The brokerage summed up its perspective by saying the Middle East conflict is expected to create both pressures and supports across the European chemicals landscape - raising costs and weighing on demand on one hand, while easing oversupply and competitive intensity on the other, even under scenarios in which the conflict resolves relatively quickly.
Summary of rating changes and target moves:
- BASF: upgraded to "buy" from "hold"; target raised to c55 from c45.
- Brenntag: upgraded to "buy" from "hold"; target raised to c57 from c46.
- Umicore: upgraded to "buy" from "hold"; target raised to c17.20 from c16.
- AkzoNobel: downgraded to "hold" from "buy"; target cut to c55 from c68.
- Givaudan: downgraded to "hold" from "buy"; target cut to CHF3,000 from CHF3,750.
- Wacker Chemie: raised to "hold" from "sell"; target raised to c68 from c59.
- Croda: remained "hold"; target trimmed to 3,000p from 3,100p.
- dsm-firmenich: remained "buy"; target cut to c75 from c80.
- Kerry Group: remained "buy"; target cut to c85 from c91.