Chemical Sector Outlook: Ecolab, Linde, and Sherwin-Williams Downgraded Amid Market Shifts
Portfolio Pulse from Lekha Gupta
Seaport Research Partners analyst Michael J. Harrison downgraded Ecolab Inc (ECL), Linde PLC (LIN), and Sherwin-Williams Co (SHW) to Neutral from Buy, citing sluggish market fundamentals in the chemical industry. He expects destocking to continue into H1 FY24 and sees raw material costs stabilizing. ECL was downgraded due to factors already priced in, LIN due to its share price nearing the target, and SHW due to limited near-term upside. The analyst adjusted EPS estimates for all three companies.
January 08, 2024 | 6:09 pm
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NEGATIVE IMPACT
Ecolab downgraded to Neutral from Buy, with EPS estimates slightly reduced for FY24 and FY25. Analyst sees long-term potential despite current market conditions.
The downgrade reflects the analyst's view that positive drivers for 2024 are already factored into ECL's stock price, suggesting limited short-term upside potential.
CONFIDENCE 85
IMPORTANCE 75
RELEVANCE 90
NEGATIVE IMPACT
Linde downgraded to Neutral as shares approach the analyst's previous price target. EPS estimates for FY24 and FY25 have been adjusted.
The downgrade is due to LIN's share price approaching the analyst's target, indicating that the stock may not have much room to grow in the short term.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 90
NEGATIVE IMPACT
Sherwin-Williams downgraded to Neutral with the share price close to the analyst's target. The company faces elevated SG&A costs, potentially limiting near-term gains.
The downgrade comes as SHW's share price is close to the target and the company is experiencing high SG&A costs, which may restrict short-term price appreciation.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 90