DJIA - Dow upgraded to Buy at Deutsche Bank on valuation recovery in China

2023-03-20 08:46:59 ET

Dow ( NYSE: DOW ) on Sunday was upgraded to Buy from an investment rating of Hold by analysts at Deutsche Bank. They said the chemical maker’s stock has declined to an attractive valuation in the past year.

“The worst is behind or close to being behind the company,” David Begleiter, analyst at Deutsche Bank, said in a March 19 report. “The plethora of investment positives far outweigh the investment negatives at this time.”

A recovery in Chinese demand also is positive for Dow ( DOW ), whose costs to make ethylene, a key chemical for making plastics and other materials, is a significant competitive advantage for the company, according to Deutsche Bank.

“As the largest ethylene producer in North America, Dow ( DOW ) is well positioned to benefit from U.S. ethane-based ethylene producers’ strong cost advantage versus naphtha-based producers in Europe and Asia,” the report said.

Deutsche Bank kept its price target for Dow ( DOW ) at $60 a share, based on a multiple of 7.2 times EBITDA for 2024.

“With Dow's ( DOW ) dividend yield of 5.6%, investors are being paid to wait until market conditions improve and Dow's ( DOW ) earnings inflect upward,” the report said. “With the current yield near the 6.5% yield where Dow's shares have historically troughed, we believe the risk/reward profile for the shares is attractive.”

Dow ( DOW ) is a component of the Dow Jones Industrial Average ( DJIA ).

For further details see: