Barclays downgraded BASF to underweight, triggering a 21% drop from its peak valuation. The bank set a €40 price target, reflecting a steep downside from the stock’s €50.62 close on Feb. 17. Analysts cited weak China demand as a key driver, with BASF’s new Zhanjiang Verbund site underperforming expectations.

The firm’s 2026 EBITDA estimate fell to €6.82 billion, below consensus, as the Zhanjiang plant’s projected €200 million–€300 million annual EBITDA lags company targets of €1 billion–€1.2 billion. The downgrade follows BASF’s FY25 profit warning, which highlighted Q4 EBITDA of €1.08 billion—its weakest in a decade. Barclays also flagged EU emissions trading costs as a structural headwind, estimating potential annual expenses of €1.02 billion by 2034.

The stock now trades at 17x one-year forward P/E, above historical averages, while free cash flow yield and ROIC lag peers. These factors, combined with China’s declining ethylene utilization rates, have eroded investor confidence in BASF’s growth prospects.