LYB: Future Returns Will Be Driven By Rebounding Catalyst Segment Demand

Analysts have trimmed their price target for LyondellBasell Industries, cutting expectations by several dollars per share to reflect weaker macro conditions, slippage in commodity businesses, and reduced EBITDA forecasts tied to soft seasonal demand and elevated inventories.

Analyst Commentary

Recent Street commentary on LyondellBasell reflects a cautious stance, with multiple firms trimming price targets into the mid 40s to around $50 per share. The overarching message points to weaker near term fundamentals, even as some see scope for eventual earnings normalization once macro and industry headwinds ease.

Bullish Takeaways

• Bullish analysts view the current price target range as already reflecting a more challenging macro environment, suggesting limited downside if earnings resets are largely complete.
• Neutral ratings from several firms indicate that, while upside is capped near term, the risk reward profile may be reasonable for longer term investors awaiting cyclical recovery.
• The recent strength seen exiting Q2 in some commodity chains, though now fading, is cited as a reminder that LyondellBasell can benefit quickly when demand and pricing turn.

Bearish Takeaways

• Bearish analysts emphasize that the downward revisions in Q3 and Q4 EBITDA, by as much as low double digits, highlight ongoing execution risk against a backdrop of soft seasonal demand and excess inventories.
• The consistent pattern of lower price targets, into the low to mid 40s for the most cautious views, is framed as evidence that prior valuation multiples were too generous for a company with volatile commodity exposure.
• Commentary points to a "decidedly negative" macro setup, with slippage in commodity businesses and highly inconsistent industrial end markets undermining visibility into margin and cash flow stability.
• Expectations for a more benign Q4 seasonality have been reduced. This raises concern that weaker utilization and pricing could persist longer than initially anticipated and delay any meaningful re rating of the shares.

What's in the News

• LyondellBasell issued new guidance for the fourth quarter of 2025, stating that it expects improved profitability as previously sold licenses reach revenue milestones, which would boost the Technology segment. (Company guidance)
• The company projects that catalyst demand will recover from unusually low third quarter levels, supporting a rebound in its Technology segment, with fourth quarter performance expected to be similar to the first quarter. (Company guidance)

Valuation Changes

• Fair Value: Unchanged at approximately $53.78 per share, indicating no adjustment to the intrinsic value estimate.
• Discount Rate: Fallen slightly from about 9.20 percent to 9.12 percent, reflecting a modestly lower required return.
• Revenue Growth: Essentially unchanged, remaining around negative 8.47 percent, signaling no material shift in top line expectations.
• Net Profit Margin: Stable at roughly 6.66 percent, suggesting no significant revision to profitability assumptions.
• Future P/E: Edged down marginally from about 11.50x to 11.48x, indicating a very small reduction in the forward valuation multiple.