In a report released today, Joshua Spector from UBS downgraded LyondellBasell (LYB – Research Report) to a Sell, with a price target of $51.00.
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Joshua Spector has given his Sell rating due to a combination of factors impacting LyondellBasell’s financial outlook. The company’s earnings are under pressure from weak chemical demand and increased costs, exacerbated by an oversupply in the polyethylene and polypropylene markets. This oversupply is expected to persist, making it challenging for the company to achieve pricing power and improve earnings in the near term.
Additionally, LyondellBasell’s free cash flow is not anticipated to cover its dividend until 2028, due to higher capital expenditures aimed at supporting advanced plastics recycling and circular solutions. The company’s valuation has been adjusted downward, with a reduced price target reflecting lower earnings expectations and a compressed earnings multiple. These factors collectively contribute to a less favorable investment outlook for LyondellBasell, justifying the Sell rating.