LyondellBasell Price Target Cut: RBC Capital Slashes Estimate Amid Market Trough

LyondellBasell Industries N.V. (LYB) has seen a significant reduction in its price target by RBC Capital, reflecting the analyst's concern over the prolonged trough in chemical markets. The firm lowered its price target on LyondellBasell to $92 from $104, maintaining an Outperform rating on the shares. This revision follows LyondellBasell's Q3 earnings miss and soft Q4 outlook, as well as a broader industry downturn.



RBC Capital's price target reduction for LyondellBasell reflects the analyst's cautious outlook on the company's prospects in the current market conditions. The chemical markets are at a "prolonged trough," as noted by Barclays, which also lowered its price target on LyondellBasell to $95 from $99. This downturn is a significant factor influencing LyondellBasell's stock performance, despite the company's strong Q3 earnings.



Despite the price target reduction, RBC Capital remains positive on LyondellBasell based on an eventual chemicals industry recovery, high capital return, and a lower capex relative to peers. The firm expects a recovery in the chemicals industry, which would benefit LyondellBasell's earnings. Additionally, LyondellBasell's high capital return, through dividends and share buybacks, provides investors with attractive yields. Lastly, LyondellBasell's lower capex relative to its peers indicates better capital efficiency, allowing the company to maintain profitability even in challenging market conditions.

The recent reduction in LyondellBasell's price target by RBC Capital has shifted the average target price downwards, but the overall consensus remains positive. The new average target price stands at $105.52, with a spread of +12.74% from the last close price of $93.60. Despite the reduction, 24 analysts still maintain an 'Outperform' or 'Buy' rating, indicating a bullish outlook on the stock. The highest price target is $118.00, and the lowest is $91.00, reflecting a range of opinions among analysts.

The price target revision from $104 to $92 at RBC Capital may have a significant impact on LyondellBasell's stock price and trading volume. Despite RBC maintaining an 'Outperform' rating, the substantial reduction in the price target could lead to a decrease in investor confidence, potentially causing the stock price to decline. This revision follows a trend of decreasing price targets from various analysts, as seen in the provided data. If investors perceive this as a bearish signal, it could result in increased selling pressure, further driving down the stock price. Additionally, the revision may attract short-sellers, further exacerbating the downward pressure on the stock. However, if the company's fundamentals remain strong and the market sentiment improves, the stock price could rebound, leading to increased trading volume.

In conclusion, the recent price target reduction for LyondellBasell by RBC Capital reflects the analyst's concern over the prolonged trough in chemical markets. Despite the reduction, RBC Capital maintains a positive outlook on the company based on an eventual industry recovery, high capital return, and lower capex relative to peers. The overall consensus on LyondellBasell's stock remains positive, with 24 analysts maintaining an 'Outperform' or 'Buy' rating. The impact of the price target revision on LyondellBasell's stock price and trading volume will depend on investor sentiment and the company's performance in the coming quarters.