FRANKFURT (dpa-AFX) - Evonik and Lanxess are particularly in the spotlight on Wednesday following a chemical sector analysis by investment bank Jefferies. Analyst Marcus Dunford-Castro upgraded Evonik to 'Buy', prompting a positive reaction in pre-market trading. Meanwhile, he turned bearish on Lanxess following its strong recovery rally in March, downgrading the stock to 'Underperform'. Consequently, Lanxess shares retreated toward their 50-day moving average on the Tradegate trading platform.
Chemical product prices are currently 'hot', but demand is not, according to the expert. Prices are primarily being driven by supply disruptions stemming from the conflict in the Middle East. However, there are already signs that this price momentum is reversing. The rally in Lanxess shares has been significantly more dynamic than that of its peers and far outpaced the upward revision of earnings expectations.
In contrast to Lanxess, Evonik's share price performance is better aligned with the increase in earnings estimates. Here, tailwinds and demand normalization are much more predictable. The analyst highlighted the company's high exposure to relatively defensive end markets.
Dunford-Castro no longer holds a negative view on chemical distributor Brenntag, upgrading the stock to 'Hold'. Shares of the DAX-listed group edged higher in a market expected to open weaker.
The European chemical sector was initially among the hardest hit by the conflict in the Middle East. The Stoxx Europe 600 Chemicals index reached its lowest level since autumn 2022 on March 23, after an 11 percent war-induced decline. Subsequently, positive price effects and easing competitive pressure from the Far East fueled a brilliant recovery to a new year-to-date high. However, after one month, the rally began to fade again in April./ag/ajx/stk
