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On Wednesday, Kepler Cheuvreux adjusted its stance on Evonik Industries AG (ETR:EVKn) (EVK:GR) (OTC: EVKIF), downgrading the stock from a Buy rating to Hold and setting a price target of EUR21.00. The move comes amid a recent rally in the stock’s price, which analysts attribute to a broader market trend favoring cyclical value stocks, as well as speculative optimism regarding potential peace in Ukraine and the subsequent rebuilding efforts that could involve Evonik.
The firm’s analysts pointed out that while the market is hopeful for a reduction in gas costs and a potential boost to Evonik from the reconstruction of Ukraine, they believe any benefits to the company will be modest and may materialize later than anticipated, if at all. With the stock’s price nearing the target, Kepler Cheuvreux sees limited upside potential and has opted for a tactical downgrade, anticipating a more favorable buying opportunity in the future.
Despite the downgrade, Kepler Cheuvreux maintains a long-term positive outlook on Evonik, considering the stock to be undervalued. The analyst’s commentary suggests a cautious approach, acknowledging the current market dynamics and the uncertainty surrounding the geopolitical situation and its impact on energy costs.
Evonik Industries AG, a leading specialty chemicals company headquartered in Germany, has been part of the broader market conversation around companies that could stand to benefit from a post-conflict economic environment in Ukraine. However, the Kepler Cheuvreux analysis indicates that while there is potential, it may not be as immediate or significant as some investors hope.
The downgrade to a Hold rating reflects a wait-and-see attitude, with Kepler Cheuvreux signaling to investors that while the current situation has driven up the stock, the anticipated benefits are not sufficient to maintain a Buy rating at this time. The firm suggests keeping an eye on Evonik for a more opportune moment to invest, based on the expectation that a better entry point could present itself in the coming months.
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