BASF: Deutsche Bank downgrades, citing lack of upside potential

(CercleFinance.com) - Deutsche Bank announced on Wednesday that it had downgraded its recommendation on BASF to 'hold' (from 'buy'), citing a lack of upside potential for the stock.


The analyst - who maintains his target price at E56 - points out that the German chemical group's share price has rebounded by 27% since its annual lows in January.

In his note, the broker attributes this recovery to the improved economic situation in Europe (rising PMIs, forthcoming rate cuts), which he believes has fueled the prospect of a "better-than-expected" Q1.

With a P/E now reaching 15.7x and an EV/Ebitda multiple of 8.3x, the stock is trading at the top end of its historical valuation range, the broker notes, which in its opinion incorporates the scenario of a strong upturn in volumes - synonymous with what now appears to be reduced upside potential.


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