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Dow Chemical: Why Analysts Are Recommending a ‘Buy’

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Jan. 6 2017, Updated 12:35 p.m. ET

Analyst recommendations for Dow Chemical

As of January 4, 2017, 20 brokerage firms were actively tracking Dow Chemical stock. Of these analysts, 75.0% have recommended a “buy” for the stock, while 20.0% have recommended a “hold.” The remaining 5.0% have recommended a “sell.”

The analysts’ consensus indicates a 12-month target price for DOW of $62.41. That implies a return potential of 7.5% from its closing price of $58.06 on January 4, 2017.

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Why analysts are recommending a ‘buy’

The Dow Chemical–DuPont (DD) merger still hangs in the balance, in the hands of regulators. But the opportunity to grow in Saudi Arabia could be DOW’s next growth driver. That may be what influenced analysts to increase the target price from $59.83 in October to $62.41 currently.

Analysts’ views on DOW’s peers

  • As of January 4, 2017, 18 brokerage firms are actively tracking Eastman Chemical (EMN). Among them, 61.0% have recommended a “buy” for the stock, and 33.0% have recommended a “hold.” The remaining 6.0% have recommended a “sell.” The analysts’ consensus indicates a 12-month target price of $82.18, implying a return potential of 6.5% from its closing price of $77.18 on January 4, 2017.
  • Monsanto (MON) is actively tracked by 18 brokerage firms. Of those analysts, 56.0% have recommended a “buy” for the stock, and 39.0% have recommended a “hold.” The remaining 5.0% have recommended a “sell.” The analysts’ consensus indicates a 12-month target price of $119.50, implying a return potential of 13.8% from its closing price of $105.05 as of January 4, 2017.

ETF investment

You can indirectly hold Dow Chemical by investing in the First Trust Indxx Global Agriculture ETF (FTAG), which has invested 10.0% of its portfolio in Dow Chemical as of January 4, 2017.

In the next part of this series, we’ll look at DOW’s valuation compared to its peers.

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