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Stock prices of BASF decrease, contributing to a drop in overall market sentiment

Israel's military actions escalate oil prices, potentially impacting BASF; Berenberg upholds 'hold' stance, setting €44 as target price.

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Oil prices surging due to Israeli attacks could impact BASF; Berenberg maintains 'hold' rating at...
Oil prices surging due to Israeli attacks could impact BASF; Berenberg maintains 'hold' rating at €44 target price.

Stock prices of BASF decrease, contributing to a drop in overall market sentiment

Tensions in the Middle East re-ignite, causing a stir

The Middle East is back in the geopolitical hot seat with Israel's newest attack on Iranian cities and nuclear facilities. Oil prices have skyrocketed as a result, and with these renewed tensions, global businesses could be in for a bumpy ride - including BASF.

Sebastian Bray, an analyst from Berenberg, believes the potential for growth in BASF, the world's largest chemical company, is primarily contingent on shrewd portfolio management and political sentiments rather than short-term earnings jumps. Bray predicts that the company's second-quarter results, due out on July 30, won't drastically alter the current picture.

In Bray's opinion, the weaker chemical spreads have carried over into the second quarter, and this strain is reflected in the sell-side estimates, which have plummeted (approximately ten percent year-over-year for 2026 EPS). Berenberg maintains its "Hold" rating with a price target of €44 in its latest assessment.

Analysts expect BASF's earnings per share to drop from €3.51 in 2024 to €3.04 this year before bouncing back to €3.57 in 2026. This would result in a paltry price-to-earnings ratio of just 12, with the possibility of even dipping to 10 in 2027 if BASF meets market expectations of €4.21 per share.

Despite the regional upheaval, BASF (WKN: BASF11) remains dependent on a thriving global economy. However, recent geopolitical unrest has cast a shadow over the outlook. Nevertheless, the blue-chip stock remains alluring to bold investors with a long-term vision.

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Disclosure:

The majority shareholder and management of Börsenmedien AG, Mr. Bernd Förtsch, and the author hold positions in BASF, which could benefit from the stock's price movement resulting from the publication.

[1] https://www.nunhems.com/en/keep-innovating/[2] https://www.basf.com/global/en/about/strategy-capabilities/business-strategy/hubs-regions.html[3] https://www.basf.com/global/en/about/corporate-responsibility/activities/climate-protection/climate-protection.html[5] https://www.nunhems.com/en/our-locations/middle-east-and-africa/egypt/

  1. The renewed tensions in the Middle East, along with the impact on global oil prices, could significantly influence the financial performance of general-news companies such as BASF, especially in the fields of business and politics.
  2. Despite the unfavorable geopolitical climate, analysts' predictions indicate that BASF's earnings per share are expected to drop this year but rebound by 2026, resulting in a relatively low price-to-earnings ratio, which might be attractive to investors with a long-term vision in the general-news sector.

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