Barclays cut its recommendation on BASF SE to Underweight from Equalweight on Thursday and established a price target of EUR40.00, pointing to what it describes as stretched valuation and underwhelming operating performance.
The bank highlighted the stock’s current price-to-earnings ratio of 143.76 as a focal point for its valuation concerns, even as BASF has returned 21% in share price over the previous year. Barclays said that the market appears to be pricing in a cyclical recovery and a liquidity-driven premium that, in its view, are not supported by the company’s operating results to date.
Supporting that view, InvestingPro data cited by analysts shows BASF trading above its Fair Value and on the overvalued side. Barclays noted that while recent policy-related headlines tied to ETS have lent some support to market sentiment, the firm sees little evidence in the underlying fundamentals of a sustained turnaround in earnings.
The downgrade follows BASF’s fiscal 2025 profit warning, which Barclays says implies the weakest fourth-quarter exit rate the company has posted in a decade. In response, the bank revised its forecasts to assume modest year-over-year growth of 1% for 2026. Barclays’ updated projections call for adjusted EBITDA of EUR7.2 billion including Coatings and EUR6.82 billion excluding Coatings.
Barclays also observed that the firm’s estimates sit roughly 3% below company consensus. The analyst house pointed to the combination of BASF’s fourth-quarter profit warning, cautious commentary on the first quarter, and muted guidance from peers as factors that offer limited support for a near-term recovery in results.
Investors should note that BASF is scheduled to report earnings in 8 days on February 27, a milestone Barclays suggests could provide additional clarity on the company’s outlook. According to the bank, the EUR40.00 price target implies approximately 20% downside from current levels.
Contextual note: The views and figures above reflect Barclays’ analysis and revised forecasts as described by the firm.