- 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.
For further details see:
Covestro AG: Cycle Is Advancing In Age, But Reasonable Long-Term Outlook