-- Berenberg raised its price target and estimates for BASF (BAS.F), expecting the German chemicals company to record a "surprisingly good, if volatile, 2026" but noted that the "overdue good fortune" is already reflected in its valuation.
"This report is the first time in years where we have substantially raised earnings forecasts for BASF. After a decade of struggling to adapt to oversupply in the chemicals sector, the most substantive pieces of news over the last six months have all been positive. Against the backdrop of domestic German stimulus, shares have responded well to: i) potential political relief on carbon taxation and select anti-dumping investigations; and ii) increases in chemicals prices caused by Iran-conflict-induced feedstock shortages at Asian peers. We are unsure of the longevity of ii, but the self-help measures, including the sale of coatings for EUR8.7bn (13x EV/EBITDA), have left the company quite well-placed to enjoy the upswing," according to a Tuesday note.
Ahead of BASF's first-quarter results on April 30, the research firm expects the recent uptick in chemical pricing to show in its profit and loss statements in March, noting the pre-release from peer Wacker Chemie (WCH.F) reflects a potential positive trend across the diversified chemicals sector.
As such, Berenberg projects first-quarter EBITDA of 2.4 billion euros, surpassing the 2.32 billion-euro market forecast. Meanwhile, the research firm's EPS assumptions were revised upwards to account for strengthening upstream chemicals prices and an increased contribution from BASF's 35% interest in British oil and gas company Harbour Energy (HBR.L).
On the other hand, analysts said their projections for the next two years remain largely in line with consensus estimates amid expectations that upstream chemical prices will partially retreat once the Strait of Hormuz reopens.
Against this backdrop, Berenberg increased the hold-rated stock's price target to 51 euros from 48 euros.