DOW Remains a Hold for Near Term

Tags: dow
4 Dec 2:44am
Posted by ZacksResearch
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The Dow Chemical Company (DOW) is the largest producer of plastics and second-leading chemical company in the world. Vertical integration keeps cost low. Stronger demand in Europe, Asia Pacific, Latin America, India, Middle East and Africa has more than offset the continued economic slowdown in North America. Moreover, price gains have largely offset significant increases in costs of feedstock and energy.

The company's recently completed joint venture agreement with Petrochemical Industries Company of Kuwait is expected to reduce cyclicality in the chemical business. Further, its merger with Rohm and Haas will consolidate higher margin and higher growth specialty businesses and reduce the volatility in earnings and cash flow.

However, high raw material costs have forced the company to temporarily idle or reduce production at several of its plants. Further, Dow has a high exposure to the commodity chemical cycle. We expect earnings to remain under pressure and rate the stock a Hold with a target of $17.00.

Read the full analyst report on DOW




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