BASF SE (BAS): Bernstein keeps BASF at Outperform as solid trading supports a €63 target

Overview

This pre-results update assesses BASF's trading into 3Q26, changes Bernstein's operating forecasts, and discusses the likelihood of a potential Evonik transaction. Bernstein sees broadly solid trading and maintains Outperform, raising its target price to €63.

Core views

Bernstein reports that BASF's trading remains solid ahead of 3Q26, with year-on-year pricing and volumes both positive. Low water levels on the Rhine are expected to have only a low-double-digit-million-euro impact on the third quarter. Sequential pricing is expected to decline in Chemicals and Materials, although Chemicals must be assessed alongside the Ludwigshafen cracker turnaround. By contrast, Nutrition & Care and Industrial Solutions are expected to deliver sequential pricing improvement because their pricing response lags. Surface Technologies is expected to be lower year-on-year due to the prior-year recycling benefit, while Agricultural Solutions may report lower 3Q volumes because demand was pulled into 2Q by the ERP-system change. The firm expects cash generation to improve sequentially in line with normal seasonality. However, it cautions that when raw-material costs and selling prices are rising, the cash benefit from higher earnings may be delayed. On its revised model, Bernstein raises 3Q26 adjusted EBITDA by 2%, to €1.511bn, which is 3% above Vara consensus. It raises 2026 and 2027 adjusted EBITDA by 1.2% and 1.7%, respectively. Its 2026 EBITDA estimate is €7.705bn, just above the upper end of BASF's €6.9bn–€7.7bn guidance range, while its 2027 estimate is €7.885bn. Bernstein considers press reports of a possible BASF-Evonik transaction but assigns a low probability to a deal, especially over the coming 9–12 months. BASF has indicated openness to smaller European consolidation transactions of roughly €1bn–€2bn, whereas Evonik's market capitalization is about €8bn. Although cost synergies and possible revenue synergies in consumer-facing parts of Evonik's portfolio could exist, Bernstein believes investors would prefer BASF to focus longer on its own transformation. It also judges BASF too cash-constrained to acquire Evonik outright before an Agricultural Solutions IPO, given its dividend and buyback commitments. Bernstein maintains its Outperform rating and increases the price target from €62 to €63. Its unchanged framework starts from a 2028E sum-of-the-parts value of €75 per share and discounts it back two years at a 9.0% WACC to reach the 12-month target. The valuation applies 7x EBITDA to Verbund, ECMS and Battery Materials, 15x to Feed Enzymes, 10x to Agricultural Solutions, publicly announced transaction values to Coatings, and a weighted-average EBITDA multiple to Other/Central costs, followed by an enterprise-value bridge using the 2028E balance sheet.

Analysis framework

Bernstein combines recent company discussions with a segment-level earnings model, comparing its forecasts with the prior model and Vara consensus. It then values BASF through a 2028E sum-of-the-parts framework, using business-specific EBITDA multiples and discounting the resulting equity value back at a 9.0% WACC.

Methodology notes

• Valuation methodsSOTP (Sum-of-the-Parts) Valuation

  2028E sum-of-the-parts valuation

  Bernstein assigns separate EBITDA multiples or transaction values to BASF's businesses, applies an enterprise-value bridge, and discounts the resulting value back two years to derive the price target.

• Industry AnalysisVolume-price decomposition

  Segment-level pricing and volume analysis

  The report explains expected earnings through changes in pricing and volumes across BASF's operating divisions, including timing effects from turnarounds, recycling benefits and the ERP-system change.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• BASF SE (BAS.GR)

  Primary covered company; Bernstein expects solid trading and earnings modestly above prior expectations.

  Strengths

  Positive year-on-year pricing and volumes; expected sequential cash-generation improvement; 2026 EBITDA estimate slightly above company guidance.

  Weaknesses

  Exposure to European upstream chemicals and potentially delayed cash conversion when input costs and prices rise.

  Comparison

  Bernstein's 3Q26 adjusted EBITDA forecast is 3% above Vara consensus.

  Risks

  Higher relative European energy costs, execution or geopolitical issues at the China Verbund site, and any reversal of portfolio reshaping.

Key data

• 3Q26E adjusted EBITDA€1.511bnRaised by 2%; 3% above Vara consensus.
• 2026E adjusted EBITDA€7.705bnRaised by 1.2%; slightly above BASF's €6.9bn–€7.7bn guidance range.
• 2027E adjusted EBITDA€7.885bnRaised by 1.7% versus Bernstein's prior estimate.
• 2026E adjusted EPS€3.30Up from €3.26 in the prior model.
• 2027E adjusted EPS€3.06Up from €3.04 in the prior model.
• Price target€63.00Raised from €62.00; based on a 2028E sum-of-the-parts valuation discounted at a 9.0% WACC.

Impact & implications

The report argues that steady trading and modest upward earnings revisions support the retained Outperform view. It sees BASF's near-term value case as driven by operating execution and portfolio transformation rather than a large acquisition of Evonik.

Risks

• A significant increase in European energy costs relative to other regions could pressure profitability; Bernstein estimates a price-target impact of more than €5.
• Problems ramping BASF's new €10bn China Verbund site or increased West-China geopolitical tension could weigh on sentiment; Bernstein estimates a price-target impact of more than €5.
• Any retreat from BASF's committed strategy and portfolio reshaping could be viewed very negatively by investors; Bernstein indicates a price-target impact of less than €10.

What to watch

• 3Q26 pricing and volume development across Chemicals, Materials, Nutrition & Care, Industrial Solutions, Surface Technologies and Agricultural Solutions.
• The actual impact of low Rhine water levels on third-quarter operations.
• The timing of seasonal cash-generation improvement and whether rising input costs delay cash conversion.
• Progress in BASF's portfolio transformation and the ramp-up of the €10bn China Verbund site.
• Any further developments regarding a possible BASF-Evonik transaction.