Jefferies cuts BASF to 'hold' on negative earnings momentum

VERBUND AG

20/05/2025 08:35

** Jefferies cuts German chemical producer BASF SE BASFn.DE to "hold" from "buy", citing negative earnings momentum on challenging spreads and demand uncertainty

** While internal changes within BASF are positive, negative earnings momentum on challenging spreads and demand is "too big a headwind," Jefferies says

** It notes that the upstream product spreads have continued to decline throughout the quarter

** "In the absence of a meaningful improvement in demand, global chemical utilization rates are likely to remain soft and near bottom of cycle levels," the brokerage adds

** The broker adds that BASF "is reaching the point of maximum pain from the China Verbund ramp-up," referring to its integrated chemical production site in China

** It estimates the ramp-up represents a 180 basis point overhang on group return on capital employed (ROCE)

** Out of 27 analysts that cover BASF, 13 rate it "buy" or "strong buy," ten rate it "hold" and four "sell"

 (Reporting by Maria Rugamer)

 ((Maria.Rugamer@thomsonreuters.com))