FRANKFURT/PARIS (dpa-AFX) - European chemical stocks outperformed the broader Stoxx Europe 600 index on Thursday, bolstered by a sector report from investment bank Oddo BHF suggesting that market expectations may be overly pessimistic. The sector index rose by 0.4 percent.
Brenntag shares climbed 0.4 percent despite a downgrade from private bank Berenberg. Symrise gained 0.9 percent, while BASF slipped by 0.4 percent. Lanxess was among the top performers in the MDax, advancing 1.1 percent, whereas Wacker Chemie traded flat. Evonik rose 0.6 percent, K+S added 0.2 percent, and Fuchs SE edged up 0.3 percent.
The European chemicals sector has endured another challenging quarter, wrote Oddo analyst Michael Schäfer. He expects that 10 out of the 18 companies he covers will lower their guidance, including BASF, Covestro, and Wacker Chemie. Schäfer has revised his own forecasts for 2025 operating results (EBITDA) down by an average of 6 percent.
However, Schäfer emphasized that the market is already aware of the sector's risks. This is reflected in consensus EBITDA estimates for the year, which are on average 4 percent below the midpoints of company guidance ranges. The most significant downward deviations are seen at Covestro and Wacker Chemie.
According to Schäfer, valuations already more than account for the expected guidance cuts. As a result, several stocks still have significant upside potential, even relative to his mostly reduced price targets. For K+S, he anticipates a continued optimistic tone and a guidance outlook likely at the upper end of the fertilizer producer's recently raised target range.
While Schäfer advises caution ahead of sector quarterly results, he expects greater clarity on U.S. tariffs after the summer. In addition, Evonik, Fuchs, Lanxess, and BASF should benefit from the German government's infrastructure measures.
Berenberg's withdrawal of its buy recommendation weighed on Brenntag only in pre-market trading. Analyst Carl Raynsford sees the chemical distributor's annual targets at risk, but noted that this risk is already largely priced into the stock. Raynsford now rates the shares as "Hold." The new price target, lowered to €55, is slightly below the current valuation level./gl/mis/jha
