Al Root
Commodity chemical stocks have been on a tear, with investors hopeful that the Iran conflict can kickstart a cyclical upturn. That's too optimistic, according to one Wall Street analyst.
On Monday, BofA Securities analyst Matthew DeYoe downgraded shares of commodity chemical makers LyondellBasell and Dow to Sell from Hold.
His Lyondell price target rose to $68 from $55. His Dow target increased to $35 from $31.
Rising price targets with downgrades to Sell tell investors something important about what's been going on. Coming into Monday trading, Lyondell and Dow stocks were both up more than 30% since the fighting started in Iran.
The commodity chemical business has been mired in a long downturn, characterized by chronic oversupply and weakening demand. Dow earned about $9.5 billion in operating profit in 2021. It earned less than $500 million in 2025.
The Iran war, however, led to higher oil prices, giving Dow and Lyondell an advantage since they make a lot of products from relatively lower-cost natural gas. What's more, the war took a lot of petrochemical capacity offline.
Dow and Lyondell stocks have received seven new Buy ratings combined since the conflict began. DeYoe thinks things have become overdone and that the benefits will be "fleeting."
"This is not to say there are no lasting tailwinds from the conflict, and we are modeling a higher crude forecast as regional instability drives up pricing," he wrote. "However, these levels would still imply material weakness in petrochemical prices off a second quarter 2026 peak."
As things "normalize," he expects lower stock prices over the coming year.
Time will tell if he is right. To be sure, things have gotten good fast for the sector. The average analyst price target for Lydondell stock is about $66. Shares were at $77.85, down 2.2% in early trading, while the S&P 500 was up 0.3%.
The average analyst price target for Dow stock is about $37. Shares were down 2.9% at $40.23 in early trading.
Write to Al Root at allen.root@dowjones.com
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(END) Dow Jones Newswires
April 06, 2026 11:44 ET (15:44 GMT)
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