BofA Downgrades Dow Inc. to Underperform Amid Market Concerns
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Apr 06 2026
0mins
Should l Buy DOW?
Source: seekingalpha
Dow Inc. (DOW) experienced a significant decline of 11.62%, hitting a 5-day low, as analysts reacted to a downgrade from Bank of America.
The downgrade from Neutral to Underperform was driven by concerns that the recent stock price rally is based on short-term market disruptions rather than fundamental improvements. Analysts raised their EBITDA forecast for 2026 to nearly $6 billion, but caution that this elevated level may not be sustainable, reflecting a market that is overly optimistic about future earnings. Additionally, the global petrochemical industry faces a structural oversupply, particularly with new capacity in China, which could lead to lower utilization rates and pricing power, necessitating significant production cuts to rebalance the market.
This downgrade highlights the challenges facing Dow Inc. amidst broader market strength, suggesting that while the overall market is rebounding, Dow's specific circumstances may lead to continued underperformance in the near term.
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Analyst Views on DOW
Wall Street analysts forecast DOW stock price to fall
14 Analyst Rating
1 Buy
12 Hold
1 Sell
Hold
Current: 35.600
Low
22.00
Averages
27.83
High
32.00
Current: 35.600
Low
22.00
Averages
27.83
High
32.00
About DOW
Dow Inc. serves as a holding company for The Dow Chemical Company and its subsidiaries. The Company conducts its operations through six global businesses, which are organized into segments, such as Packaging & Specialty Plastics, Industrial Intermediates & Infrastructure and Performance Materials & Coatings. Packaging & Specialty Plastics segment consists of two integrated global businesses: Hydrocarbons & Energy and Packaging and Specialty Plastics. This segment employs a polyolefin product portfolio. Industrial Intermediates & Infrastructure segment consists of two customer-centric global businesses: Industrial Solutions and Polyurethanes & Construction Chemicals that develop intermediate chemicals that are essential to manufacturing processes, as well as downstream, customized materials and formulations that use advanced development technologies. Performance Materials & Coatings segment consists of two global businesses: Coatings & Performance Monomers and Consumer Solutions.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Distribution History Volatility: Monthly distributions ranged from $0.11 to $0.17 in 2024 and 2025, while February and March 2026 saw spikes to $0.27 and $0.30, reflecting income fluctuations directly tied to energy market volatility.
- Commodity Volatility Dependency: NDIV's income is contingent on market volatility; while the covered call strategy enhances income during high volatility, it also introduces uncertainty regarding dividends from holdings like Petrobras and LyondellBasell.
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See More
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- Significant Stock Drop: Dow Inc. (DOW) shares fell approximately 10% on Friday, correlating with Iran's announcement that the Strait of Hormuz is open, which alleviated concerns over supply disruptions, leading to poor performance in chemical commodity stocks.
- Weak Industry Performance: Similar to Dow, shares of LyondellBasell Industries (LYB) and CF Industries (CF) dropped 12% and 9%, respectively, indicating the vulnerability of chemical and energy stocks amidst a market rally, reflecting investor concerns over future supply chain stability.
- Chemical Market Dynamics: The Middle East is the largest exporter of commodity chemicals globally, and while the reopening of the Strait of Hormuz may ease supply shocks, analysts expect that due to ongoing low liquid natural gas production, the global market will remain undersupplied, keeping prices elevated in the near term.
- Impact on Plastics Business: With over half of Dow's business reliant on plastic production, and plastic prices having risen 24% since the onset of the war, the company faces heightened risks amid supply chain changes, particularly against the backdrop of fluctuating energy prices.
See More
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- Market Rebound: The S&P 500 and Nasdaq Composite reached all-time highs this week, with the S&P 500 surpassing 7,100 for the first time, reflecting strong investor confidence in economic recovery and suggesting further upward momentum for equities.
- Earnings Expectations: According to FactSet, the S&P 500 is projected to have a blended growth rate of 12.5% in Q1, with 78% of reporting companies exceeding expectations, providing a positive backdrop for the upcoming earnings season that could further bolster market confidence.
- Oil Price Volatility: While oil prices have fallen to around $80 per barrel, significantly below the $110 peak during the conflict, the market must remain vigilant regarding the potential impacts of U.S.-Iran tensions on global supply chains, particularly concerning the safety of transit through the Strait of Hormuz.
- Technical Fragility: Despite the market's strong short-term performance, analyst Craig Johnson warns that the rapid transition from oversold to overbought conditions masks underlying macroeconomic risks, urging investors to remain cautious and focus on high-quality investment opportunities.
See More
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- Travel Stocks Rally: Following Iran's announcement to open the Strait of Hormuz for commercial shipping, Royal Caribbean surged 9.7%, United Airlines jumped over 9%, and Expedia gained 5%, reflecting optimistic market sentiment regarding travel recovery.
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See More
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- Market Plunge: Dow (DOW) and LyondellBasell (LYB) are the largest losers on the S&P 500, down 11.6% and 11.4% respectively, indicating a sharp market reaction to easing Middle East tensions.
- Energy Price Decline: The reopening of the Strait of Hormuz and progress in U.S.-Iran talks have led to a significant pullback in energy and petrochemical prices, compressing pricing power for key products like polyethylene.
- Expectation Reset: Following a recent rally driven by rising crude prices and constrained global supply, chemical companies are now facing a reassessment of future earnings as these tailwinds fade and feedstock costs normalize.
- Sector-wide Decline: Other chemical stocks also suffered, with Celanese (CE) down 8.4% and Methanex (MEOH) down 8.2%, reflecting widespread pressure across the industry and a shift in market sentiment.
See More
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- Market Recovery: On Thursday, the S&P 500 rose by 0.26% and the Nasdaq 100 by 0.49%, reaching new highs, indicating a strong rebound after early losses and reflecting investor confidence in economic recovery.
- Chip Sector Boost: Taiwan Semiconductor Manufacturing Co raised its 2026 revenue forecast, highlighting strong AI demand, which propelled chipmakers' stock prices, particularly benefiting major suppliers to Nvidia and Apple, further enhancing market optimism.
- Oil Price Impact: Despite the stock market gains, crude oil prices surged over 3%, raising concerns about the Middle East situation and limiting the market's upward momentum, illustrating the potential impact of energy prices on the overall economy.
- Mixed Economic Data: Initial jobless claims fell to 207,000, exceeding expectations and indicating labor market strength, but unexpected declines in manufacturing production reflect economic uncertainty, which could influence future monetary policy.
See More
