Berenberg downgrades Brenntag stock to Hold on geopolitical concerns

Investing.com - Berenberg downgraded Brenntag AG (ETR:BNRGn) (ETR:BNR) (OTC:BNTGY), a prominent player in the Trading Companies & Distributors industry with a market cap of $9.8 billion, from Buy to Hold on Thursday, while significantly reducing its price target to EUR55.00 from EUR71.00. According to InvestingPro analysis, the company appears undervalued at current levels, with a P/E ratio of 15.76x.

The downgrade comes as Berenberg anticipates Brenntag will likely lower its guidance range for fiscal year 2025 following what it describes as a disappointing performance in June.

Berenberg cited worsening geopolitical uncertainty from heightened tensions in the Middle East, potential profit warnings from chemical manufacturers, and a weak US dollar as key factors behind its more cautious outlook.

The research firm reduced its EBITA estimate for Brenntag from EUR1.14 billion to EUR1.05 billion for FY25, falling below the company’s current guidance range of EUR1.1 billion to EUR1.3 billion.

Berenberg expressed skepticism about Brenntag’s mid-term prospects, suggesting that a soft FY25 performance will shift investor focus to the company’s longer-term outlook.

In other recent news, Brenntag AG’s financial performance has drawn attention following the release of its first-quarter results. Deutsche Bank (ETR:DBKGn) analyst Dominic Edridge revised the company’s stock price target from EUR 86.30 to EUR 80.00, although the firm maintained a Buy rating on Brenntag shares. The revision was influenced by Brenntag’s Q1 performance, which did not meet expectations, prompting a reassessment of the company’s financial outlook. Deutsche Bank’s updated analysis resulted in an 8% decrease in the 2025 EBITA forecast, now set at €1,090 million, which is 6.7% below the previous consensus of €1,167 million. Despite these developments, Brenntag has retained its EBITA guidance of €1.1 billion to €1.3 billion, though it hinted at achieving the lower end of this range. The company’s cautious stance is attributed to softer Q1 results, macroeconomic risks, and currency exchange headwinds. Deutsche Bank’s report highlights the impact of these factors on Brenntag’s performance and financial health. Investors will closely monitor Brenntag as it navigates these challenges while aiming to meet its financial targets.

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