Last Update 08 Feb 26

Fair value Increased 0.78%

BAS: Coatings Exit And Portfolio Actions Will Shape Balanced Medium-Term Outlook

Analysts have nudged their fair value estimate for BASF up from €48.13 to €48.50, reflecting refreshed assumptions on revenue growth, profit margins and P/E multiples, even as some recent Street research has trimmed near term price targets.

Analyst Commentary

Bullish Takeaways

Bullish analysts appear comfortable fine tuning fair value rather than making wholesale changes, which can signal that they see current assumptions on revenue, margins and P/E as broadly reasonable.
The modest move in the internal fair value estimate to €48.50 suggests that, for these analysts, the recent price target adjustments still fit within a relatively tight valuation range.
Some bulls may view the contrast between a stable fair value framework and trimmed Street targets as an opportunity if they believe execution can track existing forecasts.
Maintaining a detailed, model based fair value, even as external targets shift, points to confidence in the underlying cash flow and earnings assumptions that support the €48.50 figure.

Bearish Takeaways

JPMorgan cutting its price target by €4 highlights that at least one major broker sees less upside than before, which can influence how cautious investors feel around entry levels.
Bearish analysts may read the target cut as a sign that the risk reward balance has become less attractive, even if the absolute fair value estimate has only moved slightly.
The presence of lower price targets suggests some concern about the company’s ability to fully deliver on the revenue growth and margin assumptions baked into valuation models.
For more cautious investors, the combination of a trimmed JPMorgan target and only a small adjustment in fair value could raise questions about whether execution risks are fully captured in current numbers.

What's in the News

BASF issued earnings guidance for 2025, with sales expected at €59.7b compared with €61.4b in 2024 excluding discontinued Coatings operations, EBIT expected at €1.6b versus €1.8b in 2024 and below analyst consensus of €2.2b, and net income guided to €1.6b versus €1.3b in 2024 and above analyst consensus of €1.2b (Key Developments).
At Cosmet’Agora 2026 in Paris, BASF’s Personal Care business presented its Beyond Beauty concept, covering longevity skincare, care-focused haircare and bodywash, eco-focused UV protection screened with its EcoSun Pass tool, and healthy glow make-up, targeting cross-category cosmetic solutions (Key Developments).
BASF introduced Aloversil, a hair care ingredient based on sea buckthorn seedcake, and Dehyquart S18, a biodegradable conditioning agent with 78% renewable carbon content, both aimed at hair density, combability and frizz control in conditioners, masks and treatments (Key Developments).
BASF and Essity, together with the Technical University of Wien, reported a gasification pilot that converts used diapers and other absorbent hygiene products into a synthesis gas of carbon monoxide and hydrogen for use as chemical feedstock, with the process designed to sanitize waste and keep carbon in circulation (Key Developments).
BASF commissioned a high-performance dispersant production line using Controlled Free Radical Polymerization technology at the Jiangbei New Material Technology Park in Nanjing, China, increasing global capacity and local supply options for coatings, inks and composites customers (Key Developments).

Valuation Changes

Fair Value Estimate was nudged higher from €48.13 to €48.50, keeping the modelled valuation in a tight range.
The Discount Rate edged up from 6.30% to 6.44%, implying slightly more caution in the risk assumptions applied to future cash flows.
Revenue Growth was adjusted from 34.31% to 37.87%, reflecting a modestly higher growth profile in the long term modelling.
The Net Profit Margin moved from 3.71% to 3.77%, a small uplift in expected profitability on future sales.
The Future P/E was trimmed from 21.41x to 21.28x, indicating a marginally lower valuation multiple applied to projected earnings.

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Key Takeaways

Portfolio streamlining and divestments focus BASF on higher-margin, resilient segments, with upcoming IPOs and expansion in agricultural and advanced technologies.
Strategic cost savings, energy sourcing diversification, and the new China site enhance competitiveness, stability, and margin potential amid evolving market and regulatory trends.
Prolonged low margins, structural challenges in Europe, execution risks in divestitures, and rising sustainability costs threaten profitability and could limit financial improvement for BASF.

Catalysts

About BASF

Operates as a chemical company worldwide.What are the underlying business or industry changes driving this perspective?

BASF is executing on portfolio optimization by divesting lower-growth businesses (Decorative Paints, Coatings) and preparing to IPO its high-margin Agricultural Solutions division by 2027, which should unlock value, streamline the portfolio toward higher-margin segments, and boost group-level earnings resilience and net margins.
Significant cost-savings programs (targeting €2.1 billion annual savings by end of 2026), alongside the completion of the major China Verbund investment (with project costs under budget and CapEx falling below depreciation from 2026), will meaningfully improve operating leverage and free cash flow, with cost competitiveness directly supporting improved net margins.
Expansion in Agricultural Solutions and Surface Technologies-segments benefiting from structural drivers such as sustainable food production, green mobility, and tighter emissions standards-are expected to deliver higher, more stable revenues and margin accretion, especially as secular demand for advanced agri-inputs and catalysts increases.
BASF's forward-secured and diversified long-term energy sourcing through new Equinor and Cheniere supply agreements reduces exposure to European gas price volatility and lowers the carbon footprint of its European production, enhancing operational resilience, cost structure, and long-term net margins as decarbonization pressures mount.
The Zhanjiang Verbund site in South China (commissioning end of 2025) strategically positions BASF for growth in the world's largest chemicals market and is expected to drive top-line growth and scale-based margin gains over time as local market overcapacity normalizes and regional infrastructure demand recovers.

BASF Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming BASF's revenue will grow by 3.0% annually over the next 3 years.
Analysts assume that profit margins will increase from 0.6% today to 4.7% in 3 years time.
Analysts expect earnings to reach €3.3 billion (and earnings per share of €3.73) by about September 2028, up from €388.0 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting €4.6 billion in earnings, and the most bearish expecting €2.1 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 16.1x on those 2028 earnings, down from 102.7x today. This future PE is lower 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 6.22%, as per the Simply Wall St company report.

BASF Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Persistently low margins and overcapacity in the global base chemicals market-particularly highlighted by the new Zhanjiang Verbund site in China-could weigh on group profitability for several years, impacting both revenue growth and net margins.
Weakness in European operations, especially ongoing structural challenges and possible asset closures at the Ludwigshafen site, indicate a prolonged negative demand trend in Europe; this could depress earnings, elevate restructuring costs, and erode overall group cash flow.
Flat to declining chemical market growth outside China, and muted global demand coupled with heightened uncertainty among customers, suggest risk of prolonged stagnation in sales volumes and suppressed group-wide EBITDA in key segments.
High reliance on successful execution of divestitures and portfolio optimization-particularly the sale of Coatings and potential IPO of Agricultural Solutions-carries execution risk; delays or lower-than-expected valuations could constrain planned deleveraging and limit improvement in financial health.
Rising capital expenditure requirements for decarbonization, cost inflation, and sector-wide regulatory pressures around sustainability and emissions may compress returns and require ongoing restructuring, potentially offsetting operational efficiency gains and diminishing future net earnings.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of €49.881 for BASF 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 €65.0, and the most bearish reporting a price target of just €39.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €70.9 billion, earnings will come to €3.3 billion, and it would be trading on a PE ratio of 16.1x, assuming you use a discount rate of 6.2%.
Given the current share price of €44.63, the analyst price target of €49.88 is 10.5% 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.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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