Last Update 11 Dec 25

BAS: Coatings Divestiture And Buyback Program Will Support Medium-Term Upside

Analysts have modestly raised their price target for BASF to EUR 52, citing a stronger than expected valuation for the coatings divestiture and a higher anticipated future P/E multiple, despite slightly slower revenue growth and lower margin assumptions.

Analyst Commentary

Analyst feedback on BASF reflects a predominantly constructive outlook following the coatings divestiture and the reset in valuation expectations.

Bullish Takeaways

Bullish analysts highlight that the coatings sale price came in ahead of expectations, reinforcing confidence in underlying asset quality and supporting the higher EUR 52 price target.
The resumed Buy rating is seen as validation that the portfolio reshaping strategy can unlock further value, particularly if additional non core assets are monetized on similarly attractive terms.
Stronger conviction in a higher future P/E multiple is tied to improved capital discipline and a clearer focus on core businesses, which could drive a re rating as earnings visibility improves.
Peers considering potential spin outs of agricultural businesses are viewed as an incremental positive for sector multiples, with BASF potentially benefiting from a more favorable relative valuation backdrop.

Bearish Takeaways

More cautious analysts note that the stronger valuation for the coatings business may set a high bar for future divestitures, increasing execution risk if subsequent deals price less favorably.
Slower revenue growth and softer margin assumptions temper the upside case, suggesting that the raised target multiple will require disciplined cost control and delivery on restructuring plans.
Uncertainty around regulatory and macro headwinds in key end markets limits near term visibility, which could constrain multiple expansion despite recent portfolio moves.
Comparison with peers exploring larger scale structural changes, such as full Ag carve outs, raises questions about whether BASF is moving fast enough to close the valuation gap within the sector.

What's in the News

Citi resumed coverage of BASF with a Buy rating and EUR 52 price target, citing the coatings sale price as ahead of expectations and supportive of the upgraded valuation framework (Citi, periodical).
Carlyle is reportedly nearing a roughly EUR 7 billion deal to acquire BASF's coatings business, having entered exclusive talks after outbidding rival private capital groups (Financial Times, periodical).
BASF launched a major share buyback program of up to 78.3 million shares, aiming to return capital to shareholders, cancel repurchased shares, and improve EPS while reducing net debt by mid 2026 (company announcement, key development).
BASF is consolidating its Asian PolyTHF business into its Caojing, China site and discontinuing production in Ulsan, South Korea by 2026 as part of its Winning Ways competitiveness strategy (company announcement, key development).
BASF is exploring small to midsize acquisitions of up to around EUR 2 billion, while keeping large scale deals off the agenda in the near term (management commentary, key development).

Valuation Changes

Fair Value: Unchanged at approximately €48.0 per share, indicating that the updated assumptions offset each other at the valuation level.
Discount Rate: Risen slightly from about 6.26 percent to 6.27 percent, reflecting a marginally higher required return.
Revenue Growth: Fallen significantly from roughly 1.46 percent to 0.72 percent, implying a more subdued top line outlook.
Net Profit Margin: Reduced modestly from around 4.44 percent to 3.99 percent, pointing to somewhat lower expected profitability.
Future P/E: Increased meaningfully from approximately 17.2 times to 19.6 times, signalling higher anticipated valuation multiples despite softer growth and margin assumptions.

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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