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Investing.com - RBC Capital has lowered its price target on Dow Inc. (NYSE:DOW) to $26.00 from $30.00 while maintaining a Sector Perform rating, citing a weak earnings outlook. The stock, currently trading at $25.51, sits near its 52-week low of $24.37, with InvestingPro data showing 9 analysts recently revising their earnings estimates downward.
The firm expressed concerns about Dow’s optimistic polyethylene price assumptions of +5-7 cents per pound in July, suggesting these targets might be difficult to achieve in the current market environment.
RBC does not anticipate a significant improvement in Dow’s performance during the second half of 2025, noting that export volumes could face continued pressure due to tariffs.
While the company’s recent dividend reduction wasn’t unexpected, RBC indicated that some investors might have thought other measures—such as delaying the Alberta project, implementing European shutdowns, and the NOVA judgment—would have been sufficient in the near term.
The firm has reduced its EBITDA estimates for Dow to $800 million for Q3 2025, $3.15 billion for full-year 2025, and $3.60 billion for 2026, down from previous estimates of $1.03 billion, $3.85 billion, and $4.70 billion respectively, while applying a higher 8.0x multiple (up from 7.5x) to account for trough-level EBITDA.
In other recent news, Dow Inc. announced a significant reduction in its quarterly dividend, cutting it by 50% to 35 cents per share. This decision was attributed to a challenging macroeconomic environment and a prolonged industry downturn. Moody’s Ratings downgraded Dow’s senior unsecured credit rating to Baa2 from Baa1, citing depressed earnings and governance concerns, with a negative outlook. Evercore ISI also downgraded Dow from Outperform to In Line, expressing concerns over the company’s financial outlook following the dividend cut. Additionally, BofA Securities reiterated its Underperform rating on Dow, maintaining a price target of $27.00, following Dow’s announcement of closing three European facilities. These closures, impacting 800 roles, are part of Dow’s response to structural challenges in the region. The company expects these shutdowns to contribute a $200 million EBITDA uplift by 2029.
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