DOW: Cost Reductions And Higher Operating Rates Will Drive Future Performance

Dow's analyst price target has edged down slightly to $27.82 from $27.94 as analysts point to recent earnings beat driven by cost cuts and operational improvements. However, they remain cautious given concerns about commodity market consistency and the sustainability of current gains.

Analyst Commentary

Recent analyst research captures a mix of cautious optimism and ongoing concerns regarding Dow Inc.'s outlook following its latest earnings report and market performance. Below, we summarize the main optimistic and cautious viewpoints shaping current sentiment on the stock.

Bullish Takeaways

• Bullish analysts have recently raised price targets in response to Dow's earnings beat, reflecting improved operating efficiencies and successful cost-reduction initiatives.
• Operational improvements, especially in Performance and Specialty Plastics (P&SP), have contributed to stronger margins and profitability in the short term.
• Cost cuts are seen as meaningful drivers of recent outperformance, suggesting management’s execution is delivering tangible financial benefits.
• Some analysts highlight a sector perform outlook. Despite market volatility, Dow continues to execute in line with expectations for the chemicals sector.

Bearish Takeaways

• Bearish analysts caution that the recent gains may be transitory, with sustainability questioned amid volatile commodity markets.
• Macro uncertainty and inconsistent performance across industrial end markets present challenges to ongoing growth and stability.
• Dow’s commodity businesses, after a stronger finish to the prior quarter, have faced recent slippage. This could pressure future results and valuations.
• Expectations for sequential seasonal strength have diminished. There are indications that the fourth quarter could remain soft and weigh on future performance.

What's in the News

• Kyndryl expanded its long-standing collaboration with Dow to modernize infrastructure applications, using AI and automation to enhance operational agility and innovation throughout Dow's technology stack. (Client Announcements)
• Dow completed a share repurchase program, having bought back over 38.5 million shares for $2.07 billion under its current buyback authorization. (Buyback Tranche Update)
• Dow launched DOWSIL EG-4175 Silicone Gel, a new material designed to improve reliability and efficiency in electric vehicle batteries and renewable energy systems by offering greater temperature and vibration resistance. (Product-Related Announcements)
• In partnership with Gruppo Fiori, Dow announced a breakthrough process to recover polyurethane waste from end-of-life vehicles without disassembly, supporting circularity in the automotive sector and aligning with new recycling regulations. (Strategic Alliances)
• A class action lawsuit was filed alleging Dow failed to disclose business risks and overstated its financial flexibility, which was highlighted by disappointing Q2 2025 results and a dividend cut. This led to a sharp decline in the stock price. (Lawsuits & Legal Issues)

Valuation Changes

• Consensus Analyst Price Target has edged down slightly from $27.94 to $27.82.
• Discount Rate has risen modestly from 7.66% to 7.83%, which reflects a heightened perception of risk.
• Revenue Growth projection has decreased incrementally from 0.75% to 0.73%.
• Net Profit Margin expectation remains steady, improving minimally from 4.01% to 4.01%.
• Future P/E ratio estimate has declined marginally from 15.45x to 15.21x.