Evonik stock faces softer 2027 view as Jefferies cuts rating

Jefferies has taken a more cautious view of Evonik's earnings outlook. In a report published on Wednesday, November 11, and reviewed by Investing.com, the brokerage downgraded the specialty chemicals group to Hold from Buy and cut its 2027 EBITDA forecast by 9 percent to below 2 billion euros.

Jefferies said the earnings support from supply disruptions in the Middle East is fading. Methionine prices have already fallen 43 percent from their April peak in China, 31 percent in Europe and 15 percent in the United States, while crosslinker prices have also benefited from the earlier disruption. European gas prices, by contrast, are at their highest level since November 2022.

Supply gains face a tougher test

The brokerage estimates that Evonik's EBITDA is up 14 percent year to date, but the improvement is concentrated in Advanced Technologies, where EBITDA is up 25 percent. Custom Solutions is approximately flat. Jefferies also highlighted Evonik's exposure to energy costs, with 49 percent of sales generated in Europe, the Middle East and Africa and a large share of production at energy-intensive sites.

Jefferies does not expect Evonik to reach its 11 percent return-on-capital-employed target by 2029 under its current assumptions. It forecasts 8.9 percent in 2029, compared with 6.1 percent in 2025, based on about 200 million euros of operating profit improvement and a reduction of about 14 percent in capital employed. The brokerage said a further 235 million euros of operating profit would be needed to close the remaining gap to the target.

BASF keeps strategic value in focus

The BASF takeover approach remains a central part of the valuation discussion. Evonik has rejected offers of 22.15 euros and 24 euros per share, while Jefferies said an offer above 27 euros would become increasingly difficult to justify because German site agreements limit the available synergies. In a 26-euro scenario with a transaction taking at least 12 months to close, the brokerage sees only 10 to 15 percent upside.

That assessment leaves investors weighing two competing drivers: a potential strategic premium from BASF and a more demanding earnings backdrop for the standalone business. Jefferies said near-term share price movements are likely to depend more on possible engagement between the two groups than on fundamentals alone.

Evonik stock traded at 21.06 euros on Lang & Schwarz at 12:15 CET on Friday, November 13, 0.29 percent above the Xetra close of Thursday, November 12, at 21.00 euros. The latest quote leaves the shares close to the price target of 21 euros that Jefferies set after raising it from 20 euros.

Next results set the next test

Investors will next focus on Evonik's fourth-quarter results and its 2027 guidance, scheduled for March 4, 2027. The update should show whether lower support from Middle East supply constraints is offset by portfolio measures, efficiency gains and progress in Advanced Technologies.

German equities remain the broader market setting for Evonik stock, with the DAX providing the main domestic benchmark.

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