Arkema weighed down by a degradation of UBS

In the red on this Thursday, July 14, the title of the specialty chemist Arkema lost 2.7%, to 84.66 euros, victim of a degradation from UBS, which went from “neutral” to “sell”. The group will have three challenges for the next twelve months », Explains the analyst in charge of the file.

Still downside potential

” The consensus expects the gross operating surplus to fall by 9% between 2022 and 2023, which seems too optimistic to us – we are expecting a fall of 36% – for the following reasons: the group is exposed to 37% to the construction end market – via adhesives and coating solutions – which we expect to contract 5% in the second half of 2022 and into 2023; the recent margin increase in high performance polymers is not sustainable given the expected slowdown in economic growth and the significant capacity for expansion of the PVDF range; [enfin] over the last eight quarters, EBITDA has mostly exceeded forecasts thanks to better than expected profitability in acrylic acid. However, this dynamic is set to normalize.

At the same time as it downgrades its opinion, UBS sharply reduces its target price, bringing it down from 128 euros to 82 euros, which implies a potential drop in the title of another 3%. ” Our new target assumes an enterprise value to Ebitda 2023 ratio of 6.9x, compared to 7.2x for comparables in Europe. This discount seems justified by the risk that weighs on the results, our 2023 Ebitda forecast being 30% lower than the consensus “, explains UBS.