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On Thursday, Deutsche Bank (ETR:DBKGn)’s analysts adjusted the price target for BASF SE (BAS:GR) (OTC:BASFY) shares, reducing it slightly from EUR56.00 to EUR55.00, while still maintaining a Buy rating on the stock. The adjustment comes after a recent series of investor meetings with BASF’s CFO Dr. Dirk Elvermann and Dr. Stefanie Wettberg, Senior Vice President Investor Relations, at the dbAccess European Champions Conference.
According to the analyst’s remarks, the current short-term earnings outlook for BASF is tough, but this should not be unexpected, as market expectations are already significantly below the company’s forecasts for the fiscal year 2025. The analyst highlighted that 2025 is anticipated to be the low point for BASF, with EBITDA and free cash flow (FCF) impacted by substantial start-up costs, one-time expenses, and capital expenditures.
Despite the near-term challenges, Deutsche Bank sees potential for optimism in the medium term for BASF. The optimism is underpinned by several factors, including an expected improvement in capacity utilization in Europe, which is attributed to a combination of reduced supply and potential upside in demand. Additionally, the ramp-up of BASF’s new Verbund (VIE:VERB) site in China is projected to contribute positively to the company’s performance.
The analyst also pointed to the possibility of strongly improving free cash flow generation for BASF in the future. Another potential boost for the company could come from positive developments regarding the sale of its remaining coatings assets, which the analyst believes could contribute to a more favorable news flow for BASF.
The latest closing price for BASF’s stock was EUR42.52, and with the new price target set at EUR55.00, Deutsche Bank’s stance remains optimistic about the company’s stock performance moving forward.
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