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Wednesday, Citi analysts reinstated coverage on BASF SE (BAS:GR) (OTC: OTC:BASFY), a prominent chemicals industry player with a $45.65 billion market cap, with a Neutral rating and set a price target of EUR51.00. The company has demonstrated strong momentum with a 17.86% return year-to-date. The decision comes after BASF’s announcement last week regarding the sale of its Brazilian decorative paints division for $1.15 billion, a figure that surpassed Citi’s initial estimate of €0.8 billion, which was projected to be approximately 1% of the share price. According to InvestingPro, BASF maintains a remarkable 33-year track record of consistent dividend payments, currently offering a substantial 5.03% yield.
In their statement, BASF confirmed plans to continue evaluating strategic options for its remaining Coatings assets, which are expected to be valued at over €5 billion. The company is scheduled to present detailed full-year results this Friday, with Citi expecting the EBITDA bsi guidance to align with their own and the consensus forecast of €8.4 billion.
Despite these projections, Citi anticipates that BASF’s free cash flow (FCF) guidance might not meet market expectations. Their estimate of approximately €300 million falls roughly €600 million short of the Vara consensus, which has already decreased from €1.1 billion since Citi’s last publication. This potential shortfall, equivalent to around 1% of the share price, could result in a modest underperformance of BASF stock. InvestingPro analysis suggests the stock is currently trading near its Fair Value, with additional insights available in the comprehensive Pro Research Report covering this major chemical producer.
In other recent news, BASF SE has been the focus of analyst revisions and strategic considerations. Berenberg analysts downgraded BASF from a Buy to a Hold, even as they increased the price target from EUR 50.00 to EUR 52.00. This adjustment follows a notable rise in BASF’s share price, which has climbed approximately 22% since early January. The analysts pointed out that despite favorable economic developments in Germany and China, the stock’s recent surge suggests it may now be fairly valued.
Conversely, in another report, Berenberg maintained a Buy rating with a price target of EUR 50.00, citing BASF’s promising short-term earnings outlook. This optimistic view is partly due to Chinese economic stimulus measures and improved plant utilization in Europe. Moreover, BASF’s strategic shift to link employee compensation to individual segment performance is expected to enhance division-specific results. The company is also contemplating strategic portfolio management, including potential divestitures in its Coatings unit.
Additionally, BASF’s investment in Harbour Energy is under scrutiny, with the lock-up period for its 39.6% stake expiring in the first half of 2025, potentially leading to further strategic actions. These developments provide insights into BASF’s evolving strategies and market positioning.
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