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Investing.com -- Brenntag (ETR:BNRGn) shares dipped on Monday after Barclays (LON:BARC) warned of a likely cut to the chemical distributor’s earnings guidance, citing deteriorating macroeconomic indicators and weakening demand, especially in the U.S. market.
Barclays revised its Q2 EBITA estimate for Brenntag to €263 million, down from a prior forecast of €288 million and 3.1% below the latest Vara consensus.
The brokerage also revised its organic gross profit growth estimate for the quarter to 3.1% contraction, compared to its earlier projection of 0.6% growth, reflecting a broader slowdown in the sector.
Barclays noted that customers in the U.S. have adopted a wait-and-see approach ahead of potential tariff announcements, impacting demand across the board.
Among its peers, Brenntag appears more exposed to industrial chemicals through its Essentials segment, which Barclays believes makes the company more vulnerable to the downturn.
The revised Q2 organic profit decline estimate for Brenntag is 0.7% for Azelis and 2.6% growth for IMCD (AS:IMCD), which highlights Brenntag’s comparative weakness.
The brokerage also reduced its 2025 EBITA forecast by 4.7% to €1.06 billion, which is 0.7% below consensus and under the lower bound of Brenntag’s €1.1 billion guidance.
Barclays flagged the possibility of another downward revision when the company reports second-quarter results on August 13.
If it happens, it would mark the second consecutive year that guidance was cut in both the first and second quarters after initial forecasts were set in the fourth quarter.
The brokerage noted that investor positioning is already negative, suggesting that much of the pessimism may be priced in.
Despite the lowered estimates, Barclays maintained its “equal weight” rating on the stock, which closed at €56.96 on July 3. The brokerage’s price target remains unchanged at €70, implying a potential upside of 22.9%.
Brenntag’s 2025 earnings per share forecast was lowered to €4.00 from €4.25, while consensus stands at €4.37.
The stock is currently trading at 14.3x 2025 estimated earnings. The adjusted EBITDA margin for 2025 is projected at 9%, flat year-over-year, with net income expected to drop to €578 million from €618 million in 2024.
Free cash flow is forecast to grow 42.4% to €537 million, while net debt is expected to decline to €2.56 billion.
Barclays reaffirmed its neutral view on the European specialty chemicals sector, noting limited short-term visibility.
While Azelis and IMCD have opted not to provide guidance, Brenntag continues to issue formal outlooks, potentially increasing the risk of investor disappointment amid economic uncertainty.