BMO Capital Markets has downgraded LyondellBasell Industries NV (LYB.US) from "Market Perform" to "Underperform," warning that escalating commodity and financial pressures may continue to weigh on the chemical group until 2026. BMO reduced its price target for the stock from $48 to $36, stating that this valuation reflects persistent challenges tied to weak commodity demand, margin pressures, and a lack of near-term catalysts for improvement.
LyondellBasell, founded in 2000, is the world's largest polypropylene producer and a leader in polyolefin technology. Its products include propylene oxide derivatives, biofuels, and polypropylene compounds, widely used in automotive, electronics, packaging, and healthcare industries.
BMO analyst John McNulty noted that the deterioration in key commodity market fundamentals has exceeded prior expectations, limiting the company's potential for meaningful profit recovery by 2026 or 2027. He added that while management has taken steps to strengthen the balance sheet, these conditions may continue to pressure LyondellBasell's stock price.
Management recently adopted a more conservative financial stance, which BMO views as supportive of potential dividend cuts aimed at boosting free cash flow and improving credit metrics. However, analysts cautioned that these defensive measures may not fully offset the broader structural headwinds facing the business.
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