FRANKFURT (dpa-AFX) - A downgrade by US investment bank Morgan Stanley weighed heavily on Brenntag shares on Tuesday. By early afternoon, the stock was among the weakest performers in the leading DAX index, falling 3.4 percent to €48.11. In an outlook for the European business services sector through 2026, analyst Annelies Vermeulen urged caution, particularly regarding stocks of chemical distributors.
For Brenntag, Vermeulen cut her price target from €63 to €50 and downgraded the stock from "Equal-weight" to "Underweight." As a result, she expects the stock to deliver below-average total returns over the next twelve to eighteen months compared to other sector peers she covers.
Vermeulen sees several structural and cyclical risks facing Brenntag. The group's largely standardized product portfolio is threatened by disintermediation—that is, the bypassing of intermediaries in the supply chain—as well as intensifying competition from China, she wrote. At the same time, sales volumes have been sluggish while prices have continued to come under pressure, leading to margin erosion and lower profits. According to Vermeulen, 2025 is set to mark the third consecutive year of earnings and guidance downgrades.
In the short term, the Morgan Stanley expert also anticipates strategic uncertainty, as both the CEO, CFO, and division heads have been replaced over the past twelve to eighteen months. In addition, the next capital markets day is not expected before the end of 2026 at the earliest.
As recently as early March 2024, Brenntag shares had climbed to €87.12, just shy of their all-time high from the summer of 2021. Since then, however, the stock has been on a steady downward trajectory, interrupted by only a few brief recovery attempts. From a technical perspective, the outlook for the stock remains bleak, as it has once again fallen below both the short-term 21-day and the medium-term 50-day moving averages./ck/err/mis
