BofA update shows where active managers are putting money
Investing.com -- Deutsche Bank (ETR:DBKGn) has reshuffled its ratings across Europe’s chemical distribution sector, adopting a more selective stance as it downgraded Brenntag AG (ETR:BNRGn) while upgrading both IMCD (AS:IMCD) and Azelis (EBR:AZE).
Brenntag was cut to Hold from Buy, with the price target slashed to €52 from €75. Analyst Tristan Lamotte said the downgrade reflects timing concerns, not a lack of potential.
He pointed out that Brenntag’s higher cyclicality—particularly in its Essentials segment—makes it more exposed to pricing pressure and weaker end-markets.
The company recently lowered its EBITA guidance to €950–1,050 million, down from €1.1–1.3 billion, amid signs of volume and margin stress. Deutsche’s 2025 EBITA forecast of €990 million sits roughly 7% below consensus.
By contrast, IMCD was upgraded to Buy, with its target lifted to €136 from €126. Lamotte described IMCD as a high-quality name offering long-term growth at a reasonable valuation.
“Over the past 16 years, IMCD has experienced only one year of EBITA decline, with current EBITA more than ten times greater than in 2009,” the note states.
Furthermore, it delivered an average organic EBITA growth of over 10% from 2016 to 2024.
The company’s return on capital employed has remained strong, supporting long-term total shareholder returns of around 15% annually over the past decade, surpassing even top performers like Givaudan and Air Liquide (OTC:AIQUY).
Azelis also received a Buy rating, with Deutsche raising its target to €17 from €14. Lamotte highlighted the company’s potential as an under-recognized compounder with operational strength comparable to IMCD.
While recent results were affected by cyclical timing and technical overhangs, including a large private equity stake and IPO timing, Azelis has delivered solid organic EBITA growth and margin performance.
Lamotte noted that Azelis trades at a significant valuation discount—10.9x 2025 EV/EBITDA versus 14.5x for IMCD—despite comparable operational KPIs.