BofA Cuts Sabic Price Objective, Forecasts Amid Strait of Hormuz Uncertainty
BofA Global Research revised price objective and forecasts for Saudi Basic Industries (SASE:2010), d/b/a Sabic, amid uncertainty over the pace of recovery of vessel traffic through the Strait of Hormuz, according to its report on chemicals companies in the Middle East and North Africa released Tuesday."With continued uncertainty on flow of traffic through both [Strait of Hormuz] and most recently through Red Sea, we run sensitivity analysis on 2026E EPS and P/E across our coverage under a range of volume and price assumptions. On volumes, we assume they don't recover meaningfully before next year," analysts said, noting that 80% of Sabic's domestic production capacity is located in Jubail on Saudi Arabia's East Coast. "Improving volumes [for Sabic] from 4Q26 should help in a sequential pick-up in earnings in2H26. We however believe a significant rerating potential is limited given continued weakness in petchems over the medium-term."Against this backdrop, the price objective was cut to 56 Saudi riyals from 59 riyals, with a neutral rating on the petrochemicals manufacturer's stock.Meanwhile, the EBITDA estimate for 2026 was slashed by 21.6%, while that for 2027 was reduced by 9.7%, as analysts further lowered their 2026 utilization rates across several of the company's units amid the continued closure of the Strait of Hormuz.
