Corrects price target values for Lanxess in the table. Widens distribution.
** Morgan Stanley says higher Asian costs, driven by disruptions to feedstock supply and elevated naphtha costs amid the ongoing conflict in the Middle East, are set to outpace European costs for commodity chemicals
** The broker adds that elevated Asian costs are likely to price Asian imports out of European end-markets, allowing European upstream producers to reclaim lost volumes
** MS names upstream producer BASF BASFn.DE its top pick and upgrades Evonik EVKn.DE to "overweight" on expectations of better pricing and higher spreads
** It upgrades French gas supplier Air Liquide AIRP.PA to "equal-weight" from "underweight" as a stable U.S. portfolio shields it from Middle East supply shocks
** Syensqo SYENS.BR is downgraded to "equal-weight" as its downstream exposure and high auto weighting (15% of sales) leave it facing lagged price pass-throughs, supply risks and demand destruction, delaying any recovery
** The brokerage says "we now favour those companies with upstream integration over those more downstream" as vertical integration helps navigate supply constraints
COMPANY
RATING
OLD RATING
PT
OLD PT
Air Liquide
Equal-weight
Underweight
EUR 168.00
EUR 154.00
Arkema AKE.PA
Overweight
Overweight
EUR 83.00
EUR 78.00
BASF
Overweight
Overweight
EUR 58.00
EUR 52.00
Evonik Industries
Overweight
Equal-weight
EUR 18.00
EUR 14.70
LANXESS LXSG.DE
Overweight
Overweight
EUR 20.00
EUR 26.00
Solvay SOLB.BR
Underweight
Underweight
EUR 21.00
EUR 25.00
Syensqo
Equal-weight
Overweight
EUR 50.00
EUR 63.00
(Reporting by Zakarya Meliani and Lucie Barbier)
((zakarya.meliani@thomsonreuters.com))
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