Analysts Lower LANXESS Price Target and Ratings Amid Mixed Outlook and Valuation Shifts

Key Takeaways

• Strategic portfolio shifts and investment in sustainable, higher-margin segments are expected to boost recurring earnings and broaden LANXESS's addressable markets.
  
• Cost structure optimization, digitalization, and global expansion should support organic growth, greater resilience, and improved cash flow amid evolving market demands.
  
• Rising competition, high energy costs, weak demand, overcapacity, and macroeconomic uncertainty are undermining profitability, efficiency, and long-term earnings visibility.

Catalysts

Operates as a specialty chemicals company that engages in the development, manufacture, and marketing of chemical intermediates, additives, specialty chemicals, and consumer protection products worldwide.

• Strategic portfolio optimization-including the divestiture of the urethane business, accelerated closure of high-cost, high-CO2 assets, and network consolidation-positions LANXESS to allocate capital toward higher-margin, resilient segments (e.g., specialty additives, consumer protection), which is likely to support margin expansion and more recurring earnings over time.
  
• Focused expansion in areas such as water treatment, personal care, and agrochemical markets, combined with a broad regional footprint and leaner cost structure, is expected to enable LANXESS to capture organic top-line growth and mitigate end-market risk, especially as demand from sustainability-minded sectors increases.
  
• Secular increases in regulation and consumer demand for sustainable materials are accelerating the shift toward green chemicals; LANXESS's ongoing investments in eco-friendly product lines and the closure of high CO2 assets directly target this opportunity, which should help expand its addressable market and support revenue growth and pricing power.
  
• Anticipated stabilization in tariffs and macroeconomic uncertainty, along with impending German government stimulus and infrastructure spending beginning in 2026, creates a setup for volume and revenue tailwinds when industry demand normalizes, with LANXESS well-positioned to supply a rebound due to disciplined working capital and inventory management.
  
• Ongoing portfolio and network optimization, digitalization efforts (including use of AI for efficiency gains), and an enhanced focus on cost containment are expected to deliver further operating leverage, thus improving free cash flow and ROIC even before market conditions materially improve.

LANXESS Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming LANXESS's revenue will grow by 1.4% annually over the next 3 years.
• Analysts assume that profit margins will increase from -2.7% today to 0.2% in 3 years time.
• Analysts expect earnings to reach €10.2 million (and earnings per share of €0.11) by about September 2028, up from €-165.0 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting €211.1 million in earnings, and the most bearish expecting €-65.7 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 277.8x on those 2028 earnings, up from -12.3x today. This future PE is greater than the current PE for the GB Chemicals industry at 22.0x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.2%, as per the Simply Wall St company report.

LANXESS Future Earnings Per Share Growth

Risks

• Intensifying competition from Chinese producers, especially in intermediates and additives, is leading to price erosion and market share loss in Europe and Latin America, directly threatening revenue and operating margins over the long term.
  
• Persistently high and structurally uncompetitive energy costs in Germany and Europe, compared to the U.S., are creating a sustained cost disadvantage that may not be fully offset by price pass-through, squeezing net margins and undermining LANXESS's competitiveness.
  
• Weakness and prolonged cyclical troughs in key end-markets-such as automotive, capital goods, construction, and agrochemicals-are leading to depressed demand, short-term order patterns, and production underutilization, all of which place ongoing downward pressure on top-line growth and profitability.
  
• Overcapacity and underutilization at certain production sites, as well as continued adjustment and closures of subscale plants (e.g., Widnes, Hexane Oxidation), highlight risks of asset inefficiency and weak asset turnover, which can erode returns on capital and future earnings.
  
• Macroeconomic and geopolitical uncertainty-including tariff escalations, slow government stimulus deployment, and the threat of further regulatory/lobbying-driven disruptions-are contributing to an unusually wide guidance range and heightening risks to revenue visibility, cash flow stability, and long-term earnings power.

Valuation

• The analysts have a consensus price target of €26.786 for LANXESS based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €38.0, and the most bearish reporting a price target of just €17.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €6.4 billion, earnings will come to €10.2 million, and it would be trading on a PE ratio of 277.8x, assuming you use a discount rate of 7.2%.
  
• Given the current share price of €23.58, the analyst price target of €26.79 is 12.0% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.