Investment Outlook: Growing Pessimism Surrounding BASF and Allianz Shares
Taking Stock: BASF Shares Struggle Amid Cloudy Prospects; Allianz Still a Solid Long-term Bet
The euphoria was short-lived: BASF shares are once more trending downwards, having only recently escaped a harsh bear market a few weeks ago. While Allianz isn't in the clear yet, the pressure is mounting. Here's what investors should do now.
BASF Share: Troubled Waters Ahead?
Most of the gains BASF shares garnered this year have already been pocketed by investors. The German chemical giant is back to the 200-day line and fighting for survival in the short-term. A fall below this support could see the share drop another level. But why did a key player in the Ukraine peace negotiations and special assets transition into such a big loser?
American bank JPMorgan has lowered its stance on BASF from "Neutral" to "Underweight" and slashed its price target from €52 to €45 due to reassessment of the European chemical sector by analyst Chetan Udeshi. The European market is already weak, and the demand from the US is also decreasing, according to JPMorgan. Moreover, Udeshi also believes the BASF share is relatively overpriced compared to other stocks in the sector. However, some investors might argue otherwise, given BASF's P/E ratio of 13.8 and a dividend yield of 5.09%. Nevertheless, the short-term weakness of BASF cannot be ignored.
Before investors start panicking and selling, they should remember that fear and uncertainty are prevalent on the stock market at the moment. U.S. indices are currently deciding whether they will form a double bottom, signaling a more optimistic outlook, or plunge further. In the latter case, investors should book short-term profits. Long-term, the BÖRSE ONLINE editorial team still endorse the BASF share with a target price of €65.
But what about Allianz?
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Allianz: Is Correction Imminent?
To avoid confusion: Allianz remains a favorable long-term investment. However, we've been warning for weeks that Allianz has risen strongly, and many indicators are overheating. Now, a correction to the 50-day line, around €335, or even a retest of the crucial price level at approximately €300 might be imminent.
Investors who have substantial gains and fear short-term uncertainty are taking partial profits and waiting for the situation to improve. Overall, the Allianz share is still attractively valued with a P/E ratio of 12.7 and a dividend yield of 4.75%. However, Swiss bank UBS has reassessed Allianz. Analyst Will Hardcastle has maintained his "Neutral" rating with a price target of €320. Hardcastle now prefers life insurers over non-life stocks within the European insurance sector.
Nevertheless, BÖRSE ONLINE still advocates the German dividend stock that is expected to pay a high dividend of €15.40 per share in early May, recommending it with a long-term price target of €350.
Also, check out: Fund manager warns: "I've never seen this with stocks before"or: Is the MSCI World now facing a crash? What ETF investors need to know
Allianz (WKN: 840400) Disclosure of Conflicts of Interest
The publisher Börsenmedien AG's management and majority shareholder, Mr. Bernd Förtsch, owns positions in the financial instruments mentioned in this publication that could benefit from the potential price movement resulting from this publication: BASF, Allianz.
- Despite the recent decline, BASF shares have re-entered the 200-day line, prompting investors to consider the potential for further drops.
- JPMorgan has downgraded BASF shares from "Neutral" to "Underweight," suggesting that the stock might be relatively overpriced compared to other chemicals sector stocks.
- Allianz remains a favorable long-term investment, but a correction to the 50-day line or even a retest of the crucial price level might be imminent.
- BÖRSE ONLINE continues to endorse the BASF share for long-term investments, with a target price of €65, while maintaining a more cautious outlook for Allianz, expecting a potential correction.
