Credit Suisse downgrades Europe specialties stocks

18 November 2008 15:39  [Source: ICIS news]

LONDON (ICIS news)--Analysts at Credit Suisse have lowered target share prices for European specialty chemicals companies Lanxess, Rhodia and Clariant due uncertainty in the world economy for 2009, the bank said on Tuesday.


Shares in the three companies have fallen 53% on average since November 2007 amid global economic uncertainty, with earnings estimates dropping an average of 33% for 2009, Credit Suisse said.


Lanxess’ target price was reduced to €24 from €31 due to lower peer multiples, while its ‘outperform’ outlook was reiterated due to strong third quarter results.


Credit Suisse halved its target price for French producer Rhodia to €6 from €12 and downgraded it to ‘underperform’ from ‘neutral’.


The bank said Rhodia’s stock had poor visibility and continued high volatility due to its legacy strong debt position, while its earnings forecasts had also been reduced.


Clariant’s target price was dropped to Swiss francs (Swfr) 8.5 from Swfr11 due to lower peer multiples and reduced estimates.


“For 2009 we see both strong price declines and strong volume decreases, exacerbated by destocking,” said Credit Suisse of the European specialty chemicals sector.


“We believe pricing power will not be strong enough to increase earnings as raw materials come down, but we do believe companies may be able to stabilise margins,” it added.


($1 = €0.79)


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By: Mark Watts
+44 20 8652 3214

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