JP Morgan raises BASF target ahead of Q1 results

23 April 2007 16:22  [Source: ICIS news]

LONDON (ICIS news)--JP Morgan on Monday upgraded its target share price for BASF ahead of the German chemical giant’s first quarter results, due to be published on Thursday.

 

The bank said in an analyst report that it expected BASF to increase first quarter earnings before interest and tax (EBIT) by 8% to €2.06bn ($2.79bn) on sales of €14.6bn.

 

The group’s share price target was increased to €89.57 from €80.00 with the rating maintained at Neutral.

 

JP Morgan said petrochemical margins would likely have declined since the fourth quarter as contract prices have weakened slightly from the high level at the end of 2006.  

 

“However, margins remain healthy and will likely remain well above average over the remainder of the year and into 2008,” said the report.

 

It added that over-capacity in styrenics could lead to slightly lower margins in BASF’s plastics segment, but this would be offset by a healthy demand in performance polymers and polyurethanes.

 

The agrochemicals segment was expected to see strong volume growth, benefiting from the impact of favourable growing conditions and high commodity prices.

 

For the full year 2006, BASF’s EBIT before special items rose 18.2% to €7.3bn from 2005 while its sales increased 23.1% to €52.6bn.

 

($1 = €0.74)

By: Mark Watts
+44 20 8652 3214

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