BASF Earnings Rise on Cost-Cutting, but JPMorgan Warns of Overcapacity Overhang

BASF Q1 EPS €1.06; stock up 17% on restructuring. CoreShift cuts 4,800 jobs, sells assets. JPMorgan underweight, RSI 89.5 overbought.

BASF has delivered a clear sign that its aggressive restructuring is starting to pay off. The German chemical giant reported earnings per share of €1.06 for the first quarter of 2026, up sharply from the prior year, even as revenue edged down to roughly €16 billion. Investors have rewarded the progress, pushing the stock nearly 17% higher since the start of the year to trade at €52.20, comfortably above its 50-day moving average.

The improvement in profitability comes as management deepens the CoreShift cost-cutting program. Fixed costs in the core business are targeted to fall by as much as a fifth by 2029. The human toll is mounting: more than 4,800 positions have been eliminated group-wide since the end of 2023, including 2,800 job cuts at the flagship Ludwigshafen site alone. The strategy is to strip out complexity and sharpen competitiveness in a market where European producers face relentless pressure from cheaper Asian rivals.

Portfolio reshaping is running in parallel. BASF has agreed to sell its Düsseldorf sodium silicate production facility to U.S. buyer PQ, with closure expected in the second half of 2026. That follows the planned disposal of the coatings division to private equity firm Carlyle for roughly €264 million, due to complete in the second quarter of this year. On the acquisition front, the company has wrapped up the purchase of crop-protection specialist AgBiTech and is investing €17 million in a new breeding center in Canada. In Asia, production of PolyTHF is being consolidated at the Chinese site in Caojing, while the plant in Ulsan, South Korea, is set to close by the end of 2026. BASF is also shifting more transport onto rail to mitigate risks from fluctuating Rhine river levels.

Yet for all the operational progress, some on Wall Street remain unconvinced the rally has legs. JPMorgan has lifted its price target on BASF from €36 to €40 but retains an “underweight” rating — effectively a sell recommendation. Analyst Chetan Udeshi argues that the recent tailwinds from geopolitical developments in the Middle East are fading and warns that structural overcapacity will weigh on the second half of 2026 and through 2027. The bank has placed the stock on a “Negative Catalyst Watch” ahead of the company’s detailed quarterly report in July.

The technical picture adds a note of caution. The relative strength index stands at 89.5, a level that typically signals the shares are overbought in the near term. Since hitting a 52-week low of €41.43 last July, BASF has gained nearly 25%, a run JPMorgan considers unsustainable without more durable fundamental support.

The group’s Indian subsidiary illustrates the mixed currents beneath the surface. BASF India posted a 2% rise in operating revenue to the equivalent of about €1.7 billion, but pre-tax profit dropped 9%. While the industrial segment jumped 22% and nutrition & care added 5%, the agricultural business slumped 6%.

Analysts currently project a dividend of around €2.28 per share for the full year 2026, which would offer income investors some comfort. But the key test lies ahead: the July quarterly report will reveal whether BASF can truly offset the headwinds from Chinese competition and tepid European demand — or whether JPMorgan’s structural concerns prove more accurate than the stock market’s current enthusiasm.