CVVTF - Covestro AG: Cycle Is Advancing In Age But Reasonable Long-Term Outlook

• Covestro has run up nicely since we last opined, and our thesis seems to have played out relatively as expected.
• Inflation in basic materials has really helped Covestro out, as well as strength in end-markets.
• While we think that continued strength in a couple of Covestro's end-markets is to be expected, we think medium-term vigor might decline over the next 12 months.
• Essentially, profitability is reaching the highs of a cycle, and does not gel sustainably with our macro outlook of transitory inflation.
• Long-term, we still believe in the industrial power of Covestro, and are relatively favorable to it.

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