Lyondellbasell Industries Outlook - Mixed Signals Amid Volatility and Analyst Divergence

Market Snapshot

Headline Takeaway: The stock faces a weak technical outlook with a recent price drop of -1.44%, while market expectations remain pessimistic despite some bullish flow patterns among smaller investors.

News Highlights

Recent news has highlighted broader economic and policy shifts that could indirectly affect the materials and energy sectors LyondellBasell operates in:

• US Vaccine Policy Shifts: A recent change in how the US Department of Health and Human Services approves and recommends vaccines could indirectly influence global commodity markets and manufacturing supply chains, potentially affecting demand for petrochemicals.
• Trump Fast-Tracked Uranium Mine: President Trump’s fast-tracking of a Utah uranium mine signals potential regulatory and industrial policy shifts that could impact energy markets and commodity prices, indirectly influencing the cost environment for LyondellBasell.
• China’s Factory Activity: China’s PMI rose to 49.5 in May, indicating a slight improvement in manufacturing activity despite still being below the 50 threshold for expansion. This suggests tentative signs of global industrial recovery, which may eventually benefit materials producers like LyondellBasell.

Analyst Views & Fundamentals

Analysts remain divided on LyondellBasell, with 6 active analysts providing ratings over the last 20 days. The simple average rating is 2.83, while the historical performance-weighted rating is 1.94. This divergence indicates a lack of consensus and a generally cautious outlook from the analyst community.

Analysts like Patrick Cunningham (Citigroup) and Joshua Spector (UBS) have historically shown stronger performance with above-average win rates, while others like Jeffrey J Zekauskas (JP Morgan) and Arun Viswanathan (RBC Capital) have lower historical success rates.

On the fundamental front, the internal diagnostic score is 2.89 (0-10), reflecting mixed signals. Here’s a summary of key fundamental values and their contributions:

• Current ratio: 1.77 – the company is managing liquidity reasonably well, with a strong internal diagnostic score of 3.0.
• Quick ratio: 1.04 – liquidity remains tight, with a score of 1.0.
• Cost of sales ratio: 91.29% – a high proportion of revenue going toward costs, with a low internal score of 0.0.
• Total profit / EBIT: 61.93% – relatively efficient operating margins, supporting a moderate internal score of 1.0.
• Cash-MV: -0.26 – a negative reading on cash-to-market value, with a score of 2.0.

These mixed signals align with the weak technical outlook and suggest investors should remain cautious, especially given the divergence in analyst expectations.

Money-Flow Trends

Big money continues to pull back from LyondellBasell. Large and extra-large fund inflow ratios are negative, at 49.54% and 48.83%, respectively, while block fund flows are also in retreat (49.10%). This indicates professional and institutional investors are becoming more cautious.

On the flip side, small investors are still showing some interest, with a positive small trend and an inflow ratio of 50.30%. This suggests retail traders may still see some upside potential in the stock despite the bearish professional sentiment.

The internal fund-flow score is 7.79 (0-10), indicating that small retail inflows are supporting the stock to some degree, but large players are not yet convinced of its strength.

Key Technical Signals

LyondellBasell’s technical outlook is weak, with internal diagnostic scores for key indicators showing a mixed picture:

• Long Lower Shadow: A bullish pattern with an internal diagnostic score of 7.85 (0-10), suggesting a potential reversal in the short term.
• MACD Death Cross: A bearish crossover, but here it’s showing a bullish bias with a score of 7.56, indicating some positive momentum.
• WR Oversold: A bearish signal with a low score of 1.17, reflecting weakness in the near term.
• Dividend Payable Date: Often a bearish event for stock price, with a score of 1.0, reinforcing caution ahead of the event.

Over the past five days, key signals include:

• September 15: WR Oversold + MACD Death Cross both triggered, adding bearish pressure.
• September 8: A long lower shadow formed, suggesting a potential short-term rebound.

Overall, the technical score is 4.39 (0-10), indicating a weak technical trend with a balanced mix of bearish and bullish signals. The key insight is that the market remains volatile and directionally unclear, with a need to closely monitor price reactions to key levels and events.

Conclusion

LyondellBasell Industries is caught in a crosscurrent of mixed technical signals and divergent analyst views. While small investors continue to show interest, larger players and institutional investors are pulling back, reflecting a lack of conviction in the stock’s near-term potential.

Consider waiting for a clearer breakout or pull-back before taking a position, and keep a close eye on the dividend payable date and WR Oversold levels as potential triggers for volatility. With an internal technical score of 4.39 and a weak market outlook, caution remains the best strategy for now.