09 October 2008 10:46 [Source: ICIS news]
LONDON (ICIS news)--Credit Suisse on Thursday warned stocks in Europe’s chemical producers could reach historic lows in the current economic turmoil as analysts slashed price targets across the sector.
Chemical stocks had dropped 23% in the last three months, with stocks currently trading close to all-time valuation lows, the bank said.
Credit Suisse said the chemicals sector was overvalued with almost no companies predicting a decline in earnings in 2009 despite the global economy stagnating.
“Instead of comforting us on the underlying fundamentals, this worries us… we do not believe chemicals will rally until some realism comes back into the sector,” it said.
“We accept that this recession is exacerbated by a lack of credit which means stocks could reach new lows,” Credit Suisse said in a note to investors.
The Dow Jones Eurostoxx Chemicals index, an indicator of the region's chemicals stocks, had dropped 12% over the last three days as uncertainty over the global financial system caused a sharp downturn in the markets.
Earlier in the week, Deutsche Bank cut its 2009 earnings forecasts for several European chemicals producers due to increasing pressures from the global economic crisis, warning profits could be slashed by over 40% for some companies if the situation got dramatically worse.
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