ING downgrades 'earthquake zone' chems sector

02 December 2008 10:56  [Source: ICIS news]

ING downgrades LONDON (ICIS news)--ING has lowered its target prices and recommendations for several European chemicals company stocks, likening uncertainty in the sector to an “earthquake zone”, the investment bank said on Tuesday.


The bank said the chemicals sector was experiencing almost unprecedented uncertainty due to the major decline in demand, with no signs of improvement amid the weakening macro-economic environment.


“We have reduced estimates across the board,” said ING analyst Paul Satchell.


“We have decided on a broad-brush approach, [seeing] more detailed analysis as offering only spurious accuracy given the pace of current changes and dismal visibility.”


ING downgraded recommendations on shares in BASF, Solvay and DSM to sell from hold, while Akzo Nobel was dropped to hold from buy.


The bank also reduced target share prices for these companies, in addition to industrial gas producers Air Liquide and Linde, with the latter its sole buy recommendation.


Satchell said the sector was also significantly at risk for further downgrade corrections during the next six months as end-user markets showed little sign of recovery in the near term.


“We expect to see analysts being forced into another round of estimate downgrades, as comparisons to previous downturns become increasingly irrelevant,” he said.


From the end of May to the market opening on Monday, the Eurostoxx Chemicals index has dropped 40%, compared with a 36% drop in the general Eurostoxx 50 index.


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By: Mark Watts
+44 20 8652 3214

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