AKE: Recent Downgrade Will Be Offset By Sustainability Actions And Emissions Reductions

Analysts have lowered the fair value estimate for Arkema from €70.63 to €66.06, citing cautious sector sentiment and a series of reduced price targets across the chemical industry.

Analyst Commentary

Analysts continue to reassess Arkema's prospects in response to both company-specific and broader sector developments. The latest research notes highlight divided sentiment in the market, with both optimistic and cautious viewpoints emerging.

• Bullish analysts maintain Buy ratings on Arkema, indicating confidence in the company's long-term value even as the sector faces near-term headwinds.
• Recent price target adjustments have been lower, but still represent potential upside compared to current trading levels. This suggests analysts see room for recovery if market conditions stabilize.
• Supporters highlight Arkema's diversified operations and product mix, emphasizing resilience and potential growth opportunities if demand improves.
• The company's recent actions to align with industry trends are viewed as positive steps for execution and future earnings potential.

• Bearish analysts express a negative outlook on the European chemicals sector, advising caution due to ongoing pricing and demand challenges impacting diversified chemicals groups like Arkema.
• Further reductions in price targets reflect expectations of subdued profitability and slow growth in the near term.
• The stock has been downgraded in response to ongoing sector uncertainty, raising concerns about Arkema's ability to outperform peers in a difficult macro environment.
• Current sentiment favors companies in industrial gases and distribution, while analysts show less conviction toward diversified chemical producers such as Arkema.

What's in the News

• Arkema achieved ISCC PLUS certification for waterborne acrylic resins at its Boretto, Italy facility. This supports sustainable coatings with up to 100% Product Carbon Footprint reduction. (Key Developments)
• The company completed a €40 million modernization and decarbonization project at its Lacq/Mourenx site. This resulted in a 40% reduction in SO2 emissions, over 10% reduction in GHG emissions, and lower water consumption. (Key Developments)
• Arkema's polyester powder coating resins site in North Kansas City, Missouri received ISCC PLUS certification, achieving global certification across all powder resin facilities. (Key Developments)
• The successful start-up of a 15 kt Forane 1233zd production unit in Calvert City, Kentucky enables Arkema to provide low Global Warming Potential fluorospecialties for the insulation and thermal management sectors. (Key Developments)

Valuation Changes

• Fair Value Estimate has decreased from €70.63 to €66.06, reflecting a more cautious outlook on Arkema's intrinsic value.
• Discount Rate has risen slightly, from 8.48% to 8.90%. This indicates increased perceived risk in future cash flows.
• Revenue Growth assumptions have been revised upward, from 0.59% to 1.86%. This suggests an improved outlook for sales growth.
• Net Profit Margin expectation has increased marginally, from 4.46% to 4.54%.
• Future P/E multiple has fallen from 16.41x to 13.47x, pointing to a lower valuation on expected earnings.