BASF Caught in Crosscurrents as Cost-Cutting Gains Collide With JPMorgan’s July Warning

Despite strong Q1 earnings and restructuring gains, BASF stock faces headwinds from JPMorgan's Negative Catalyst Watch and technical resistance at €55.

The chemical giant’s stock is staging a delicate balancing act between solid first-quarter earnings and a bearish call from one of Wall Street’s biggest houses. Shares edged 0.86% lower to €51.75 on Friday, even as the broader market attempted to stabilise, after JPMorgan placed the equity on a “Negative Catalyst Watch” ahead of BASF’s second-quarter report due in July.

Profitability Improves Despite Slipping Revenue

BASF’s first-quarter figures underscored the impact of its sweeping restructuring. Revenue dipped slightly to roughly €16 billion, but earnings per share jumped to €1.06 — a clear sign that the “CoreShift” cost-cutting programme is gaining traction. Investors have rewarded the discipline, driving the stock almost 17% higher since the start of the year. The shares now trade at around €52.20, comfortably above their 50-day moving average.

The restructuring, however, exacts a heavy human toll. Since the end of 2023, BASF has eliminated more than 4,800 positions group-wide, including 2,800 at its Ludwigshafen headquarters alone. The target is to slash fixed costs in the core business by as much as one-fifth by 2029.

Portfolio Reshuffling Accelerates

Management is simultaneously pruning non-core assets and reinforcing growth areas. The sale of the sodium silicate production facility in Düsseldorf to US group PQ is expected to close in the second half of 2026. Meanwhile, BASF has completed the acquisition of crop-protection specialist AgBiTech and is pouring €17 million into a new breeding centre in Canada.

In Asia, the group is streamlining its footprint by concentrating PolyTHF production at its Chinese site in Caojing, while the South Korean plant in Ulsan will shut down at the end of 2026. The switch to rail transport, prompted by volatile Rhine water levels, adds further operational agility.

JPMorgan Cuts Through the Optimism

Despite the operational progress, JPMorgan analyst Chetan Udeshi struck a cautious tone. He nudged his price target up from €36 to €40 — still roughly 23% below the current share price — and maintained an “Underweight” rating. The bank’s “Negative Catalyst Watch” centres on the July interim report, arguing that market expectations have become too elevated.

Udeshi warned that the “industry blues” are returning. Short-term tailwinds, including geopolitical tensions in the Middle East, are fading, while structural headwinds — global overcapacity and intensifying competition from Chinese producers — are reasserting themselves. The second-half outlook for 2026 and 2027 also drew scepticism.

Technical Resistance and Overbought Signals

From a chart perspective, the €55 mark has repeatedly acted as a ceiling, rejecting rallies in both 2024 and 2025. After the latest pullback, the stock is now searching for a floor. First support lies in the €50.48–€50.80 zone, built up since April. A break below that opens the door to the analyst target of €40.

The rally has also pushed the relative strength index to an extreme 89.5, flashing a classic warning that profit-taking may be imminent. Nevertheless, the operational trajectory remains pointed in the right direction, with analysts pencilling in a dividend of roughly €2.28 per share for the full year 2026.

Broader Sector Pressure

BASF’s weakness is not an isolated case. Lanxess also came under fire after sell recommendations surfaced, underscoring a broader loss of faith in a special-cycle recovery. The combination of moderate global growth and massive capacity additions in Asia continues to squeeze European chemical makers. Until concrete signs of a turnaround emerge, the sector remains under a cloud.

All eyes now turn to the summer interim reports, which will test whether the company’s full-year forecasts can hold in the face of mounting fundamental pressures.