Dow, the American chemical company, was boosted after Deutsche Bank analyst David Begleiter upgraded its stock from Hold to Buy. This upgrade has led to a rise in Dow’s stock price, and Begleiter cited several reasons for his optimistic outlook on the company’s future.
One of the reasons cited by Begleiter is the uptick in Chinese demand. The Chinese economy is showing signs of recovery, which bodes well for Dow, which has a significant presence in the country. The Chinese market has been a critical driver of growth for Dow in recent years, and a continued recovery in this market would be a positive development for the company.
Another reason Begleiter cites is Dow’s position as a low-cost producer of ethylene. Ethylene is a fundamental building block for the chemical industry, and Dow’s ability to produce it at a low cost gives it a significant competitive advantage. This advantage is expected to help the company weather the challenges posed by the COVID-19 pandemic and the global economic downturn.
Begleiter also believes that the worst is behind or close to being behind the company. Like many other companies, Dow has faced significant challenges in the past year due to the pandemic and the resulting economic downturn. However, Begleiter is optimistic that the company has weathered the worst of these challenges and is well-positioned to recover in the coming years.
Dow’s dividend yield of 5.6% also makes it an attractive investment opportunity, according to Begleiter. The company’s dividend yield is among the highest in the chemical industry, traditionally a draw for investors.
Despite Begleiter’s optimism, other analysts remain cautious about Dow’s prospects. The consensus rating for the stock is currently Hold, based on three Buys, 12 Holds, and one Sell. This suggests that while there are reasons for optimism, significant challenges are facing the company in the coming years.
In summary, Dow’s stock price has been boosted following an upgrade from Deutsche Bank analyst David Begleiter. While Begleiter is optimistic about the company’s future, other analysts remain cautious. Dow’s ability to weather the challenges posed by the pandemic and the global economic downturn, as well as its position as a low-cost producer of ethylene, will be critical factors to watch in the coming months and years.
Overall, while the recent upgrade from Deutsche Bank has been a positive sign for Dow’s stock price, there are still some concerns regarding the company’s future. One major issue is the ongoing global chip shortage, which has impacted the automotive industry and other manufacturers that rely on semiconductors. Dow, which supplies materials for the production of chips, has also been affected by the shortage, and it remains to be seen how long it will take for the situation to improve.
In addition, Dow is also facing increasing pressure to address environmental and social concerns, such as reducing its greenhouse gas emissions and ensuring ethical supply chain practices. These issues have become increasingly important for investors, and companies that fail to address them may face negative consequences in the long term.
Despite these challenges, Dow’s position as a low-cost producer of ethylene and other chemicals has helped it weather the storm of the past few years. With the global economy showing signs of recovery and demand for chemicals rebounding, the company could be well-positioned for growth in the coming years. As always, however, investors should consider all factors before making investment decisions.
