Citigroup downgrades Canada’s NOVA Chem

09 July 2008 14:38  [Source: ICIS news]

TORONTO (ICIS news)--Citigroup has downgraded the shares of Canada’s NOVA Chemicals and reduced its target price, mainly due to upcoming significant new capacities in the Middle East and a global economic slowdown, it said on Wednesday.

 

Citigroup downgraded NOVA’s shares to sell from hold and it cut its target price for the stock to $21, from $25. The shares closed at $24.76, up 1.31% from the previous close.

 

“Our downgrade is not a short-term call, but a medium-term cyclical call,” the analysts said in a research note to clients.

 

“We are getting increasingly concerned about the impact of the economic slowdown on the shape of the ethylene cycle.”

 

While acknowledging NOVA’s feedstock cost advantage in Alberta, relative to US Gulf coast producers, the general direction of the ethylene cycle was downward, the analysts said.

 

Last week, Citigroup already lowered its profit estimates for most of the US-based chemical producers it covers.

 

($1 = €0.64)

 

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By: Stefan Baumgarten
+1 713 525 2653

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