J.P. Morgan Upgrades Dow Inc. to Overweight with $40 Price Target
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 4 hours ago
0mins
Should l Buy DOW?
Source: seekingalpha
- Rating Upgrade: J.P. Morgan upgraded Dow Inc. from Neutral to Overweight with a price target increase from $26 to $40, reflecting expectations for a sharp rise in near-term polyethylene prices due to higher energy costs.
- Market Challenges: Despite facing weak demand in China and Europe, global capacity additions, and high interest rates, Dow's 4.2% dividend yield highlights its attractiveness in a low cyclical earnings environment.
- Cost Impact: The analyst noted that each $10 increase in Brent oil prices could boost Dow's annual EBITDA by approximately $1 billion, while recent naphtha price increases of $142/ton to $775/ton could raise polyethylene production costs by about $0.20/lb.
- Relative Valuation: Dow trades at a discount compared to peers, with a projected EBITDA multiple of 9.7x for FY 2026 and 7.7x for FY 2027, significantly lower than Westlake and LyondellBasell, indicating potential investment opportunities.
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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: 33.720
Low
22.00
Averages
27.83
High
32.00
Current: 33.720
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.
J.P. Morgan Upgrades Dow Inc. to Overweight with $40 Price Target
- Rating Upgrade: J.P. Morgan upgraded Dow Inc. from Neutral to Overweight with a price target increase from $26 to $40, reflecting expectations for a sharp rise in near-term polyethylene prices due to higher energy costs.
- Market Challenges: Despite facing weak demand in China and Europe, global capacity additions, and high interest rates, Dow's 4.2% dividend yield highlights its attractiveness in a low cyclical earnings environment.
- Cost Impact: The analyst noted that each $10 increase in Brent oil prices could boost Dow's annual EBITDA by approximately $1 billion, while recent naphtha price increases of $142/ton to $775/ton could raise polyethylene production costs by about $0.20/lb.
- Relative Valuation: Dow trades at a discount compared to peers, with a projected EBITDA multiple of 9.7x for FY 2026 and 7.7x for FY 2027, significantly lower than Westlake and LyondellBasell, indicating potential investment opportunities.
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- Rising Oil Prices: Oil prices reached their highest levels since April 2024, causing U.S. gas prices to rise, which benefits Costco as its reputation for low gas prices attracts more customers, leading to a 1% increase in its stock price on Friday.
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- Market Pressure: Rising oil prices are putting pressure on stock futures, particularly in light of an unexpected drop in February payrolls, leaving the market in a state of limbo, prompting analysts to advise caution against exiting stocks despite the prevailing uncertainty.
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DOW INC STOCKS REACH HIGHEST LEVEL IN OVER 11 MONTHS FOLLOWING JP MORGAN UPGRADE TO OVERWEIGHT, INCREASING BY 2.2%
Market Performance: Dow Inc. shares have hit a 11-month high following a recent rise in stock value.
JP Morgan's Influence: The increase in Dow Inc. shares is attributed to JP Morgan's positive outlook and weight adjustment from neutral to overweight.
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Major Wall Street Rating Changes Overview
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- Netflix Revenue Growth Outlook: CFRA upgraded Netflix from hold to buy, projecting an additional revenue growth of $1.5 billion to $3 billion by 2026 driven by member growth and advertising, underscoring its leadership position in the streaming industry.
- First Advantage Benefits from Job Market: Barclays upgraded First Advantage from equal weight to overweight, citing the company's advantage in a resilient job market for background checks, indicating confidence in its future growth prospects.
- Marvell Technology Growth Acceleration: Bank of America upgraded Marvell Technology from neutral to buy with a price target raised to $118, driven by strong demand for AI optical connectivity and the upcoming Microsoft custom chip program, reflecting a positive outlook on its earnings potential.
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S&P 500 Futures Decline in Pre-Market Trading; Ingram Micro and Gap Underperform
- Market Opening: U.S. stock markets are set to open in two hours.
- Marvell Technology Inc. Performance: Marvell Technology Inc. (MRVL) saw an increase of 11.4% in pre-market trading.
- Samsara Inc. Performance: Samsara Inc. (IOT) experienced a rise of 11.0% in pre-market trading.
- Overall Market Sentiment: The significant pre-market gains for both companies indicate positive investor sentiment ahead of the market opening.
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J.P. Morgan Upgrades Dow Inc. to Overweight with $40 Price Target
- Rating Upgrade: J.P. Morgan upgraded Dow Inc. from Neutral to Overweight with a price target increase from $26 to $40, reflecting expectations for a sharp rise in near-term polyethylene prices due to higher energy costs.
- Market Challenges: Despite facing weak demand in China and Europe, global capacity additions, and high interest rates, Dow's 4.2% dividend yield highlights its attractiveness in a low cyclical earnings environment.
- Cost Impact: The analyst noted that each $10 increase in Brent oil prices could boost Dow's annual EBITDA by approximately $1 billion, while recent naphtha price increases of $142/ton to $775/ton could raise polyethylene production costs by about $0.20/lb.
- Relative Valuation: Dow trades at a discount compared to peers, with a projected EBITDA multiple of 9.7x for FY 2026 and 7.7x for FY 2027, significantly lower than Westlake and LyondellBasell, indicating potential investment opportunities.
See More
Middle East Tensions Weigh on Stock Market
- Market Reaction: The S&P 500 and Nasdaq both fell about 1% on Friday due to escalating tensions in the Middle East, reflecting increased investor uncertainty, particularly after President Trump stated there would be no deal with Iran.
- Rising Oil Prices: Oil prices reached their highest levels since April 2024, causing U.S. gas prices to rise, which benefits Costco as its reputation for low gas prices attracts more customers, leading to a 1% increase in its stock price on Friday.
- Financial Sector Pressure: Financial stocks continue to face pressure as a spike in private credit redemptions weighs on sentiment, with shares of Goldman Sachs, Capital One, and Wells Fargo declining, while BlackRock's stock dropped nearly 6% after it limited withdrawals from a private credit fund, raising concerns about financial health.
- Investment Strategy: During Friday's meeting, Jim Cramer highlighted that despite the market's downturn, there are still buying opportunities, particularly favoring Goldman Sachs and Cardinal Health, the latter of which saw its fourth purchase this week.
See More
Oil Prices Surge Amid U.S.-Iran Tensions
- Oil Price Surge: Oil prices are rising sharply due to concerns over the U.S.-Iran conflict, with global benchmark Brent nearing $90 per barrel and U.S. crude approaching $87, posing challenges to American energy self-sufficiency and potentially leading Gulf producers to halt exports, exacerbating market uncertainty.
- Market Pressure: Rising oil prices are putting pressure on stock futures, particularly in light of an unexpected drop in February payrolls, leaving the market in a state of limbo, prompting analysts to advise caution against exiting stocks despite the prevailing uncertainty.
- Strong Performance by Marvell: Chipmaker Marvell raised its revenue growth projections for fiscal years 2027 and 2028 following a strong finish to FY26, driven by booming data center demand, with shares rising 11% in premarket trading, indicating strong market confidence in its growth trajectory.
- Costco Sales Growth: Costco reported impressive same-store sales growth, although its membership renewal rates in the U.S. and Canada remain under pressure, leading analysts to raise their price targets, reflecting optimism about the company's long-term performance despite current challenges.
See More
DOW INC STOCKS REACH HIGHEST LEVEL IN OVER 11 MONTHS FOLLOWING JP MORGAN UPGRADE TO OVERWEIGHT, INCREASING BY 2.2%
Market Performance: Dow Inc. shares have hit a 11-month high following a recent rise in stock value.
JP Morgan's Influence: The increase in Dow Inc. shares is attributed to JP Morgan's positive outlook and weight adjustment from neutral to overweight.
See More
Major Wall Street Rating Changes Overview
- Union Pacific Upgrade: Baird upgraded Union Pacific from neutral to outperform with a price target of $311, suggesting investors should capitalize on share weakness to increase exposure, reflecting optimism about potential synergies from upcoming transactions.
- Netflix Revenue Growth Outlook: CFRA upgraded Netflix from hold to buy, projecting an additional revenue growth of $1.5 billion to $3 billion by 2026 driven by member growth and advertising, underscoring its leadership position in the streaming industry.
- First Advantage Benefits from Job Market: Barclays upgraded First Advantage from equal weight to overweight, citing the company's advantage in a resilient job market for background checks, indicating confidence in its future growth prospects.
- Marvell Technology Growth Acceleration: Bank of America upgraded Marvell Technology from neutral to buy with a price target raised to $118, driven by strong demand for AI optical connectivity and the upcoming Microsoft custom chip program, reflecting a positive outlook on its earnings potential.
See More
S&P 500 Futures Decline in Pre-Market Trading; Ingram Micro and Gap Underperform
- Market Opening: U.S. stock markets are set to open in two hours.
- Marvell Technology Inc. Performance: Marvell Technology Inc. (MRVL) saw an increase of 11.4% in pre-market trading.
- Samsara Inc. Performance: Samsara Inc. (IOT) experienced a rise of 11.0% in pre-market trading.
- Overall Market Sentiment: The significant pre-market gains for both companies indicate positive investor sentiment ahead of the market opening.
See More
