BASF Q3 Earnings Set to Normalise, EU Trade Curbs a Potential Tailwind: mwb

mwb Research reiterated its Hold rating and €55 price target on BASF (ETR: BAS) ahead of the chemical maker’s third-quarter results on October 28. The firm expects earnings to normalize after an exceptionally strong second quarter.

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Analyst Abed Jarad forecasts third-quarter adjusted EBITDA of about €1.65 billion, around 8% above consensus, compared with €2.45 billion in the second quarter.

“The sequential decline should primarily reflect the fading of temporary upstream pricing benefits related to the Middle East supply disruptions, alongside seasonal effects and the normalization of elevated hedging and trading gains,” wrote Jarad.

“Nevertheless, we expect underlying trading to remain relatively resilient, supported by continued volume contributions from the Zhanjiang ramp-up and no material deterioration in end-market demand.”

mwb sees scope for BASF to modestly exceed its 2026 guidance. Its full-year estimate is €7.8 billion in adjusted EBITDA.

Cash flow is expected to be a key focus. BASF’s negative first-half free cash flow of €1.6 billion leaves a demanding second-half requirement of €3.1 billion to €3.9 billion to meet its unchanged 2026 guidance. The company has achieved about €2 billion of annualized cost savings, against a year-end target of €2.3 billion.

“More importantly, we will look for evidence that restructuring is translating into a sustainably lower fixed-cost base rather than merely offsetting inflationary pressures,” the analyst said.

Jarad also highlighted Friday’s EU summit, where the European Commission outlined plans for additional trade safeguards against Chinese imports. Chemicals and plastics were among the sectors identified. He said reduced competition could ease pricing pressure, particularly in BASF’s upstream businesses.

However, with the shares trading near €53, close to mwb’s fair value, the firm believes much of the anticipated operational improvement is already priced in.