Research Alert: CFRA Cuts Rating On Shares Of Dow Inc. To Sell From Hold

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Research Alert: CFRA Cuts Rating On Shares Of Dow Inc. To Sell From Hold

, MT Newswires - 12:25 PM ET 3/20/2025 default

12:25 PM EDT, 03/20/2025 (MT Newswires) -- CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:

We lower our 12-month target by $9 to $28 on a forward P/E of 11.5x our 2026 EPS of $2.45 (cut $0.77), a discount to DOW's three-year average of 12.2x, justified by weaker fundamentals. We cut our 2025 EPS by $0.46 to $1.81. With tariff concerns lingering, as well as the appointment as RFK Jr. as U.S. Health Secretary, we lower our sales/margin estimates for 2025/2026. We think tightening regulations around various chemicals pose a long-term risk to a sizeable piece of DOW's operations, with ~38% of total sales derived from plastic/plastic packaging, by our estimate. Margin pressure also contributes to our pessimistic outlook, with natural gas prices forecasted to rise 91% in 2025 and Brent oil prices forecasted to fall 8% (various DOW products move with Brent oil). We see declining FCF as an issue, with adj. FCF of -$37 million in 2024, down from $2.8 billion in 2023, along with long-term solvency ratios, with adj. EBIT/interest expense of just 3.2x, below peers and net debt/adj. EBIT of 5.8x, above peers.

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