Deutsche Bank slashes BASF EPS forecasts

31 October 2008 10:31  [Source: ICIS news]

LONDON (ICIS news)--Deutsche Bank has reduced BASF's earnings per share (EPS) forecasts by up to 35% on the back of assumptions there will be a tough downturn, the bank's analysts said on Friday .

The analysts said in a note to clients that EPS growth in 2007 was 29.29%, while in 2008 it was expected to fall by 4.35% and by 27.94% in 2009.

“We see the Ciba deal as broadly immaterial to forecasts, but accept that while BASF is ‘less cyclical’ it is not ‘non-cyclical’,” they said.

"We now factor in a tough downturn in 2009 (oil $60, global GDP 1%) which is leading us to reduce EPS forecasts by up to 35%,” they added.

Deutsche Bank also cut the German chemicals major’s target share price to €35 from €58.

The analysts said that Deutsche’s forecasts were now 33% below consensus, but that material consensus downgrades were likely over the next three to six months.

“Even on our conservative forecasts, BASF's valuation is around the lows of the early '90s,” said the analysts.

BASF’s shares were at €24.50 at 09:41 GMT, up 1.83% on the previous close. In January, its share price hit a high of €52.87. 

The company posted a 37.5% plunge in its third-quarter net profits to €758m ($984m) on Thursday due to high raw material costs and hurricane-related losses.

($1 = €0.77)

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Author: Hilde Ovrebekk
+44 20 8652 3214

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