Stifel sees tough 2023-2024 for chemicals, more profit warnings to come
03/07/2023 08:34
** Stifel expects tough H2 2023 and FY 2024 for European
chemical companies, punctuated by profit warnings as sentiment
towards the sector turns back to negative
** It prefers companies with predictable growth, given a
cyclical recovery is postponed, with diversified and upstream
firms at the end of its pecking order
** The broker's top picks are gas companies such as Air
Liquide AIRP.PA ("buy")
** It also keeps "buy" on Bayer BAYGn.DE , Covestro
1COV.DE , Fuchs Petrolub FPEn.DE , Kemira KEMIRA.HE , Linde
LIN.DE , SGL Carbon SGCG.DE and Wacker Chemie WCHG.DE
** It upgrades Givaudan GIVN.S to "buy" from "hold",
seeing an inflection point for margins, aided by price hikes and
cost savings, and improving volume trends
** Stifel raises KWS Saat KWSG.DE to "buy" from "hold" as
it sees a favourable environment for the seeds producer,
highlighting recent outlook raises and increases in sugar prices
** Its cuts Brenntag BNRGn.DE and Croda CRDA.L to "hold"
from "buy" on the former's limited upside potential and "too
ambitious" guidance, and the latter's recent profit warning
** It downgrades DSM-Firmenich DSFIR.AS to "hold" from
"buy", not expecting a rebound in vitamin A prices and seeing
further decline in vitamin E
** Stifel cuts Evonik EVKn.DE and Solvay SOLB.BR to
"hold" from "buy" on the former's YoY earnings decline and the
latter's limited upside
(Reporting by Tristan Veyet)
((Tristan.chabba@thomsonreuters.com))