Last Update 11 Jan 26

Fair value Increased 0.21%

BAS: Coatings Sale And Portfolio Moves Will Anchor Medium-Term Upside Potential

Analysts have nudged their price target for BASF slightly higher to €52. This reflects updated assumptions on fair value and future P/E, supported by recent Street research that highlights the coatings sale price as ahead of expectations.

Analyst Commentary

Recent research commentary centers on the resumed coverage and the €52 price target, with the coatings sale price seen as an important reference point for fair value. Here is how bullish and cautious views are shaping up around that stance.

Bullish Takeaways

Bullish analysts see the €52 target as supported by updated fair value work that explicitly factors in the coatings sale price, which they view as ahead of expectations.
The coatings transaction is treated as a proof point that portfolio assets can clear at valuations that help underpin the implied P/E used in current models.
Resumed coverage with a clear target gives investors a reference anchor for near term valuation discussions and reduces uncertainty around how to treat the coatings proceeds.
Supportive Street research around the transaction signals confidence that management can execute on disposals in a way that is consistent with current equity pricing assumptions.

Bearish Takeaways

Bearish analysts may question how repeatable the coatings sale pricing is across the broader portfolio, so they are cautious about extrapolating this deal to the entire business.
There can be concern that the €52 target leans heavily on a single transaction datapoint, which might limit upside if future asset sales or operations do not command similar terms.
Some cautious views focus on execution risk around any further portfolio actions, where timing, buyer appetite and pricing could all influence how close BASF trades to assumed P/E levels.
Investors who are more conservative may see the current target as leaving less margin for error if underlying operating trends or future transactions do not match the assumptions embedded in Street models.

What's in the News

Citi resumed coverage of BASF with a Buy rating and a €52 price target, citing the coatings sale price as ahead of expectations as a key input to its view (Periodical).
BASF commissioned a high performance dispersant production line in Nanjing, China, using Controlled Free Radical Polymerization technology to expand global capacity and support high end coatings, inks and composites demand (Key Development).
BASF plans to discontinue PolyTHF production at its Ulsan site in South Korea by 2026, consolidating activity into its Caojing site in China as part of a review of its global production setup (Key Development).
BASF announced Cavipor clay foam insulation, designed for energy efficient renovation of double wall masonry, with approvals that extend use across the building envelope and a focus on recyclability and low emissions (Key Development).
BASF is expanding its Basotect portfolio with Basotect Dark EcoBalanced, a dark melamine resin foam aimed at sound absorption applications, combining acoustic performance with a reduced product carbon footprint and use of renewable feedstock (Key Development).

Valuation Changes

Fair Value: increased slightly from €48.03 to €48.13 per share.
Discount Rate: moved modestly higher from 6.27% to 6.30%.
Revenue Growth: revised from 72.45% to 34.31%.
Net Profit Margin: adjusted from 3.99% to 3.71%.
Future P/E: raised from 19.62x to 21.41x.

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.

Have other thoughts on BASF?

Create your own narrative on this stock, and estimate its Fair Value using our Valuator tool.

Create Narrative

How well do narratives help inform your perspective?

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.

Asset Sales Momentum And Recovery Outlook Will Shape Ag Unit’s Market Debut