Shares of Dow Inc. inched lower Friday, placing them on track to undergo a sixth-straight reduction, just after an additional Wall Street analyst downgraded the chemicals and specialty resources organization, citing fears over falling commodity chemical costs.
Analyst Jeffrey Zekauskas at J.P. Morgan reduced his ranking to neutral, immediately after remaining at over weight since December 2020. He also slashed his stock cost concentrate on by 22% to $47 from $60.
The stock
DOW,
slipped .1% in early morning buying and selling, to place it on keep track of to shut at a seven-week reduced. The stock has dropped 10.5% more than the previous 6 periods.
Zekauskas also slice his score on fellow chemical compounds company LyondellBasell Industries NV
LYB,
to neutral from overweight, and reduced his stock rate goal to $80 from $115. The inventory eased .1% Friday morning.
“Lyondell and Dow are in all probability not the most effective spots to place new money to perform,” Zekauskas wrote in a be aware to customers. “The path of shorter-phrase commodity chemical charges and volumes is decidedly lessen.”
He mentioned that although the companies’ reasonably superior dividend yields are “attractive,” he thinks they hold much less attract for buyers presented the mounting yields in risk-cost-free Treasury securities.
At latest rates, Dow’s dividend yield was 5.61% and Lyondell’s was 5.82%, which compares with the implied generate for the S&P 500 index
SPX,
of 1.65%. In the meantime, the produce on the 10-yr Treasury notice
TMUBMUSD10Y,
was 3.205% on Friday, up from 1.515% at the conclude of 2021.
J.P. Morgan’s downgrades of Dow and Lyondell are the second this week, in accordance to FactSet, subsequent KeyBanc Capital’s Aleksey Yefremov reducing each providers to underweight from sector fat, citing issues over publicity to the economic downturn in the petrochemical (PE) industry.
Never miss: Dow inventory dives immediately after KeyBanc suggests ‘petrochemical economic downturn is upon us.’
J.P. Morgan’s Zekauskas reported that although the Dow’s and Lyondell’s dividend yields are no for a longer time eye-catching sufficient to warrant shopping for, they are as well higher to recommend offering.
“[B]oth organizations give dividend yields over 5.5%, which we consider secure. Both of those corporations are probably to produce absolutely free cash movement yields previously mentioned 10% in 2023. Each businesses have very good balance sheets,” Zekauskas wrote. “We are unwilling to underweight the two companies for these good reasons.”
Dow’s stock has tumbled 26.7% over the past three months and Lyondell shares have sunk 29.1%, even though the S&P 500 has missing 4.8%.
Shares of Dow Inc. inched lower Friday, placing them on track to undergo a sixth-straight reduction, just after an additional Wall Street analyst downgraded the chemicals and specialty resources organization, citing fears over falling commodity chemical costs.
Analyst Jeffrey Zekauskas at J.P. Morgan reduced his ranking to neutral, immediately after remaining at over weight since December 2020. He also slashed his stock cost concentrate on by 22% to $47 from $60.
The stock
DOW,
slipped .1% in early morning buying and selling, to place it on keep track of to shut at a seven-week reduced. The stock has dropped 10.5% more than the previous 6 periods.
Zekauskas also slice his score on fellow chemical compounds company LyondellBasell Industries NV
LYB,
to neutral from overweight, and reduced his stock rate goal to $80 from $115. The inventory eased .1% Friday morning.
“Lyondell and Dow are in all probability not the most effective spots to place new money to perform,” Zekauskas wrote in a be aware to customers. “The path of shorter-phrase commodity chemical charges and volumes is decidedly lessen.”
He mentioned that although the companies’ reasonably superior dividend yields are “attractive,” he thinks they hold much less attract for buyers presented the mounting yields in risk-cost-free Treasury securities.
At latest rates, Dow’s dividend yield was 5.61% and Lyondell’s was 5.82%, which compares with the implied generate for the S&P 500 index
SPX,
of 1.65%. In the meantime, the produce on the 10-yr Treasury notice
TMUBMUSD10Y,
was 3.205% on Friday, up from 1.515% at the conclude of 2021.
J.P. Morgan’s downgrades of Dow and Lyondell are the second this week, in accordance to FactSet, subsequent KeyBanc Capital’s Aleksey Yefremov reducing each providers to underweight from sector fat, citing issues over publicity to the economic downturn in the petrochemical (PE) industry.
Never miss: Dow inventory dives immediately after KeyBanc suggests ‘petrochemical economic downturn is upon us.’
J.P. Morgan’s Zekauskas reported that although the Dow’s and Lyondell’s dividend yields are no for a longer time eye-catching sufficient to warrant shopping for, they are as well higher to recommend offering.
“[B]oth organizations give dividend yields over 5.5%, which we consider secure. Both of those corporations are probably to produce absolutely free cash movement yields previously mentioned 10% in 2023. Each businesses have very good balance sheets,” Zekauskas wrote. “We are unwilling to underweight the two companies for these good reasons.”
Dow’s stock has tumbled 26.7% over the past three months and Lyondell shares have sunk 29.1%, even though the S&P 500 has missing 4.8%.