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LyondellBasell: Analysts’ Views and Recommendations

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Analysts’ recommendations

Since June 2017, the number of analysts covering LyondellBasell has increased from 23 analysts to 24 analysts. Among them, 33 analysts recommended the stock as a “buy,” 58% recommended the stock as a “hold,” and 9% recommended the stock as a “sell.”

Analysts’ consensus suggests that LyondellBasell’s 12-month target price will be $95.78, which implies a return potential of 4.40% over the closing price of $91.72 as of September 7, 2017.

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Why many analysts gave it a “hold”

LyondellBasell posted better-than-expected 2Q17 earnings. During 2Q17, ethylene crackers in Europe and the US operated at a 98% productivity level. At the same time, the refinery segment also operated at 99% capacity. With no major planned maintenance, management has a positive outlook for the rest of the year. As a result, most of the analysts recommended the stock as a “hold.”

Recommendations from individual brokerage firms

  • Deutsche Bank (DB) recommended a target price of $94.00, which implies a return potential of 2.50% over the closing price of $91.72 as of September 7, 2017.
  • Evercore ISI rated LyondellBasell as a “buy” with a target price of $109, which implies a return potential of 18.80% over its closing price of $91.72 as of September 7, 2017.
  • Susquehanna downgraded its rating on LyondellBasell from “positive” to “neutral.” It didn’t provide a target price for the stock.

Investors looking for indirect exposure to LyondellBasell can consider the Vanguard Materials ETF (VAW). VAW has invested 3.60% of its portfolio in LyondellBasell. The fund also provides exposure to Monsanto (MON) and Praxair (PX) with weights of 6.0% and 4.40%, respectively, as of September 7, 2017.

In the next part, we’ll discuss LyondellBasell’s valuations.

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