Lanxess Shares Fall After JPMorgan Downgrades Stock Due to Weak Outlook

Shares of Lanxess AG experienced a decline after JPMorgan downgraded the stock from “neutral” to “underweight.”

At 5:41 AM (0941 GMT), Lanxess was trading at €27.985, reflecting a drop of 2.8%. The brokerage expressed concerns about the company’s financial outlook, noting that its shares had surpasses JPMorgan’s unchanged price target of €26 set for December 2025.

Prior to the downgrade, the stock was trading at €28.68. JPMorgan pointed out a challenging macroeconomic environment, highlighting uncertainties related to demand recovery, particularly from China, as well as ongoing interest rate cuts in various regions.

Despite Lanxess’s attempts to strengthen its balance sheet through cost-cutting, reduced capital expenditures, and asset sales, JPMorgan remains skeptical about the potential for a significant recovery.

A critical factor in JPMorgan’s decision was Lanxess’s weaker margins and return on invested capital (ROIC) compared to competitors. The bank anticipates that Lanxess’s ROIC will remain considerably lower through 2025 while the company continues to carry relatively high levels of debt.

Furthermore, recent changes to the portfolio and asset sales, including the divestment of its urethane systems business, have not yielded the expected financial benefits necessary to justify a more favorable valuation, according to JPMorgan’s evaluation.

The brokerage also revised its earnings predictions for Lanxess, lowering estimates for earnings before interest, taxes, depreciation, and amortization for both 2024 and 2025. It sees limited upside potential for the stock, particularly against a challenging market backdrop, and thus advised investors to reconsider their positions in the company.