Investing.com -- Berenberg downgraded Arkema SA (EPA:AKE) to "hold" from "buy" rating, setting a price target of €62, after shares rose 19% year-to-date to reach €62.30.
Analyst Sebastian Bray said the Iran conflict drove Southeast Asian acrylic acid minus propylene spreads from under $200 per tonne to over $900 in weeks, a gain Berenberg estimates will add over €100 million to Arkema's 2026 EBITDA.
"Some of the reasons for the improvement in shares - notably the Iran-conflict-induced surge in acrylics margins- are likely to prove temporary," Bray said.
Berenberg's AI nowcasting model, ChemCast, sees only 2% upside to Visible Alpha consensus Q1 EBITDA estimates for 2026, while flagging a 10.3% downside risk to 2027 consensus EBITDA of €1.37 billion against a model forecast of €1.23 billion, with the gap attributed to expected margin normalisation as the Strait of Hormuz reopens.
The brokerage raised its 2026 sales estimate by 4.6% to €9.31 billion and EBIT by 38.4% to €643 million.
Adjusted EPS for 2026 was revised up 42.5% to €5.54, against €4.67 in 2027 and €5.28 in 2028, implying a negative EPS CAGR of 9.6% through 2028.
At 6x 2026 EV/EBITDA, close to the historical average, Berenberg values Arkema via a sum-of-the-parts model using 2027 earnings. Advanced Materials, the largest division, carries a 7.4x multiple on EBITDA of €624 million, implying an enterprise value of €4.62 billion.
Adhesive Solutions is valued at 6.8x on €383 million EBITDA for €2.61 billion, while Coatings Solutions at 5x on €207 million yields €1.03 billion.
Intermediates valued at four times €159 million imply €638 million. After subtracting €4.56 billion of debt, €800 million of hybrid debt, €340 million of pension liabilities and €189 million of minority interests, and adding €2.19 billion in cash and €42 million of investments, the implied equity value is €4.69 billion.
This supports a price target of €62 per share, based on 75.5 million shares outstanding.
Net debt/EBITDA stands at 2.5x in 2025, improving to 2.2x in 2026 before widening again to 2.3x in 2027.
The dividend per share remains flat at €3.60 across all forecast years, representing a yield of 5.8% on the current price, with the payout ratio at 65% in 2026 rising to 77.2% in 2027. Free cash flow per share is €7.31 in 2026, falling to €6.15 in 2027.
Arkema's volumes remain below pre-pandemic levels and have not grown consistently since the mid-2010s, Bray noted, adding that a break-up involving a sale of the adhesives unit at 8-9x EV/EBITDA "could, in our view, yield over EUR70/share of value."