reports
- Rob Hales
- CFA
Mixed Results for BASF in 1Q; Shares Fairly Valued
Narrow-moat BASF eked out a 2% increase in EBIT in the first quarter compared with the prior-year period. This pales in comparison with the 58% increase recorded in the last quarter. Currency headwinds were a major drag on earnings. Results in the traditional chemicals businesses were mixed, while a recovery in the oil and gas market was the key contributor to the positive EBIT growth: EBIT in the oil and gas segment more than doubled over 2017. Agricultural solutions continued to struggle with ...
- Rob Hales
- CFA
Strong but unsustainable second quarter for BASF; higher raw material ...
We are maintaining our EUR 78 fair value estimate for narrow-moat BASFÂ after reviewing third-quarter results. Our ADR fair value estimate moves to $23 from $93 due to a 4-for-1 share split and currency changes. EBIT increased 16% from the year-ago quarter, slightly better than our already optimistic forecast. Strength resided entirely in the chemical segment. Similar to Covestro, BASF is benefiting from continued supply disruptions in the polyurethane market. This led to a 126% increase in EBIT...
- Rob Hales
- CFA
Solid 3Q for BASF in Chemicals; Higher Raw Material Costs Hurt Downstr...
We are maintaining our EUR 78 fair value estimate for narrow-moat BASFÂ after reviewing third-quarter results. Our ADR fair value estimate moves to $23 from $93 due to a 4-for-1 share split and currency changes. EBIT increased 16% from the year-ago quarter, slightly better than our already optimistic forecast. Strength resided entirely in the chemical segment. Similar to Covestro, BASF is benefiting from continued supply disruptions in the polyurethane market. This led to a 126% increase in EBIT...
- Rob Hales
- CFA
Monsanto-Bayer Deal One Step Closer to Completion After Bayer Agrees t...
Bayer agreed to sell select crop science businesses to BASF for EUR 5.9 billion in a deal that is likely to satisfy regulator’s concerns regarding Bayer’s proposed acquisition of Monsanto. The crop science businesses that Bayer will divest include a portion of the LibertyLink genetically modified (GM) platform as well as some seeds and crop chemicals assets. Since the acquisition was announced in September 2016, we have expected Bayer would need to divest some seeds assets as a condition to ...
- Rob Hales
- CFA
BASF to Acquire Solvay’s Polyamide Business; Maintaining FVEs and Mo...
BASF and Solvay have announced that they have entered into a binding agreement for BASF to acquire Solvay’s polyamide business for EUR 1.6 billion. The deal is expected to close in the third quarter of 2018, with Solvay expecting net cash proceeds of EUR 1.1 billion. We view this as a fair price for a relatively small transaction for both companies. Consequently, we are maintaining our fair value estimates and moat ratings for both companies. Narrow-moat BASF has a fair value estimate of EUR 7...
- Rob Hales
- CFA
Strong 2Q for BASF, but Not Sustainable; Higher Raw Material Costs Now...
We are maintaining narrow-moat BASF’s EUR 78 fair value estimate after reviewing the firm's second-quarter results. Our fair value estimate for the ADR moves to $93 from $85, strictly due to currency changes. Last quarter, we argued that BASF’s guidance for high-single-digit EBIT growth was overly conservative, as we believe high-teens growth is realistic. Consequently, we were not surprised to see BASF raise guidance to at least 11% EBIT growth with second-quarter results. We still think do...
- Rob Hales
- CFA
Raising BASF FVE on Higher 2017 Profits and Increasing Confidence in P...
We are increasing our fair value estimate for narrow-moat BASF to EUR 78 per share from EUR 74 after reviewing first-quarter results. The ADR moves to $85 from $81. BASF reported strong results in the first quarter, with EBIT increasing 29% over the prior-year period, although we think some temporary effects contributed to the result. In any case, we have boosted our 2017 EBIT estimate, and BASF’s guidance for high-single-digit EBIT growth now looks overly conservative. We think high-double-di...
- Rob Hales
- CFA
Raising BASF's FVE on higher 2017 profits and increasing confidence in...
We are maintaining our narrow moat rating after reviewing BASF's fourth-quarter results. We expect to raise our EUR 74 fair value estimate slightly to reflect the time value of money. At current levels, the shares look moderately overvalued. Fourth-quarter EBIT was up 15% year over year but below our estimate due to a EUR 200 million swing in the firm's long-term performance incentive program. Ignoring that, EBIT in the core operating segments was slightly better than expected on the back of st...
- Rob Hales
- CFA
Industry Supply Disruptions Boost BASF's 4Q Results; Outlook Improving
We are maintaining our narrow moat rating after reviewing BASF's fourth-quarter results. We expect to raise our EUR 74 fair value estimate slightly to reflect the time value of money. At current levels, the shares look moderately overvalued. Fourth-quarter EBIT was up 15% year over year but below our estimate due to a EUR 200 million swing in the firm's long-term performance incentive program. Ignoring that, EBIT in the core operating segments was slightly better than expected on the back of st...
- Rob Hales
- CFA
Encouraging Progress in BASF’s Performance Products Business; Limite...
After reviewing BASF’s third-quarter results, we are maintaining our EUR 74 fair value estimate and narrow moat rating. Our fair value estimate for the ADR moves to $81 from $84; this is due entirely to changes in foreign exchange rates. BASF confirmed its 2016 guidance. The recent fire at the company’s largest production facility in Ludwigshafen, Germany, is expected to have only a modest negative impact on earnings. At current levels, shares look fairly valued. In the chemicals segment, EB...
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