Dow Inc (DOW – Research Report), the Basic Materials sector company, was revisited by a Wall Street analyst on January 26. Analyst John McNulty from BMO Capital remains neutral on the stock and has a $56.00 price target.
Geoff Meacham has given his Hold rating due to a combination of factors impacting Dow Inc’s near and long-term outlook. His analysis suggests that while the company’s fourth-quarter earnings before interest, taxes, depreciation, and amortization (EBITDA) were just shy of the market and BMO’s expectations, there were positive signs in the Performance Solutions & Packaging (PSP) sector. However, challenges persist in other segments such as Performance Materials & Coatings (PMC), and Industrial Intermediates & Infrastructure (II&I), due to soft markets and new capacity coming online. His projections for the company’s earnings remain below consensus for the years 2024-2025, indicating limited upside potential for the stock, which supports his decision to maintain a Market Perform rating.
Further, Meacham’s forecast for the first quarter of 2024 suggests EBITDA will be in line with management’s guidance but lowered from previous estimates due to weaker performance in PMC amid a challenging macroeconomic environment. Despite expectations of higher polyethylene (PE) prices and integrated margins, the anticipated seasonal volume increases in PMC and II&I may not fully offset the supply pressures. Dow Inc’s management maintains a cautiously optimistic perspective, with no immediate signs of a restocking cycle and potential for supply chain disruptions to impact demand. The balanced risk/reward profile, strong focus on operations and shareholder value, along with a steady approach towards long-term growth, underpin the Hold recommendation.
McNulty covers the Basic Materials sector, focusing on stocks such as Air Products and Chemicals, Celanese, and RPM International. According to TipRanks, McNulty has an average return of 3.0% and a 54.82% success rate on recommended stocks.
In another report released today, Citi also maintained a Hold rating on the stock with a $56.00 price target.
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Dow Inc (DOW) Company Description:
Incorporated in 2018, Michigan-based Dow, Inc. provides materials science solutions for consumer care, infrastructure, and packaging markets in the United States, Canada, Europe, the Middle East, Africa, India, the Asia Pacific, and Latin America. It operates through three segments: Packaging & Specialty Plastics, Industrial Intermediates & Infrastructure, and Performance Materials and Coatings.
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