Dow Analyst No Longer Bearish As Earnings Stability Improves

Dow Inc’s (NYSE:DOW) earnings stability has improved, supported by stronger petrochemical pricing, China demand and Middle East risk, according to BofA Securities.

The Dow Analyst: Analyst Matthew DeYoe upgraded the rating from Underperform to Neutral and raised the price target from $29 to $31.

The Dow Thesis: Persistent geopolitical instability in the Middle East "has created risk of a higher-for-longer crude oil environment," DeYoe said in the upgrade note.

This led to stronger pricing for polyethylene and ethylene glycols in September, he added.

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Expect Inflation To Remain Higher For Longer

While China has become a net importer of chemicals, the analyst noted that the possibility of a US-Iran peace deal is low, so inflation may remain elevated longer.

DeYoe said Dow’s earnings stability is likely to be further supported by "material traction" in the company’s ongoing productivity initiatives of more than $2 billion. "All this said, shares have returned to pre-war levels and are trading below our price objective," he further wrote.

The analyst raised the EBITDA estimates, citing higher polyethylene prices in September and "additional strength in other key ethylene chains."

He expects Dow to guide to fourth-quarter EBITDA of $1.454 billion, higher than current consensus of $1.378 billion.

"We suspect this better outlook will lend to equity market strength, particularly in the backdrop of a more durable setting for broader energy inflation," DeYoe wrote.

The analyst raised the EBITDA estimate for 2026 from $6.053 billion to $6.187 billion, citing "better margins amid product shortages and rising oil prices."

DOW Price Action: Dow shares rose 0.50% to $29.97 at the time of publication on Monday.