Houston, Texas-based LyondellBasell Industries N.V. (LYB) is one of the leading plastics, chemical and refining companies globally. Its products are used in electronics, automotive parts, packaging, construction materials and biofuels. With a market cap of $26.9 billion, LyondellBasell’s operations span North America, Europe, Indo-Pacific, and internationally.
LyondellBasell has substantially lagged behind the broader market over the past year. LYB stock prices have plunged 12.9% on a YTD basis and 13.5% over the past 52-week period, underperforming the S&P 500 Index’s ($SPX) 24.7% gains in 2024 and 31.1% returns over the past year.
Narrowing the focus, LyondellBasell has also underperformed the Materials Select Sector SPDR Fund’s (XLB) gains of 9.4% in 2024 and 15.9% over the past 52 weeks.
LyondellBasell had a tough start to the year, its stock prices fell 1.9% after the release of its fiscal 2023 earnings on Feb. 2 as the company reported a staggering 18.5% year-over-year drop in sales and other operating revenues to $41.1 billion primarily due to softer demand in China, which unsettled investor confidence.
More recently, LYB stock experienced a marginal drop after the release of its disappointing Q3 earnings on Nov. 1 and continued to plummet during the next trading session. The company has continued to observe a decline in topline and earnings. While its total revenues declined over 2.9% year-over-year to $10.3 billion, its adjusted EPS registered a massive drop of 16.1% year-over-year to $1.88 which also fell short of analysts' bottom-line estimates by a notable 7.4%.
The continued softness of demand and uncertainty regarding potential recovery in Asian markets have been hurting LyondellBasell’s financials. However, the company’s focus on operational and commercial excellence has allowed it to capture opportunities and meet customer needs while making progress on its long-term strategies which would drive sustainable value in the coming quarters. Additionally, the easing interest rates are expected to improve demand for durable goods in the coming fiscal year which would benefit LYB’s polypropylene and I&D businesses.
For the current fiscal year, ending in December, analysts expect LYB to report an 18% year-over-year drop in adjusted EPS to $7.09. The company has a mixed earnings surprise history. It surpassed analysts’ bottom-line estimates twice over the past four quarters while missing on two other occasions.
LYB stock has a consensus “Moderate Buy” rating overall. Among the 19 analysts covering the stock, five recommend “Strong Buy,” two advise “Moderate Buy,” 10 suggest “Hold,” and two advocate a “Strong Sell” rating.
This configuration has been consistent over the past three months.
On Nov. 8, Piper Sandler Companies (PIPR) analyst Charles Neivert maintained an “Overweight” rating while lowering the price target to $112, representing a 35.3% premium to the current price levels. Meanwhile, LYB’s mean price target of $99.56 suggests an upside potential of 20.2%.
