Jefferies in a note dated Wednesday upgraded Evonik Industries to "buy" from "hold" with a price target of €20 per share, while downgrading Lanxess to "underperform" from "hold" with a €16 target.
The firm argued that a supply-led pricing spike from the Iran conflict has created a valuation disconnect favoring Evonik's defensive earnings base over Lanxess's stretched re-rating.
BASF upstream spreads surged 57% from pre-war levels to a recent peak before pulling back 19%, a move Jefferies attributed to supply disruption, Chinese volume redirection, and customer pre-buying rather than structural demand improvement.
Evonik's shares rose 19% since the conflict began against a 12% consensus FY26 EBITDA upgrade of 12%, a tighter alignment than peers. Jefferies raised its own FY26 EBITDA estimate 16% to €2.17 billion, sitting 3% above consensus of €2.10 billion.
Methionine spreads stood 95% above their medium-term average. "As one of the few integrated producers with safer supply security, this should support Evonik's negotiating position," the note said.
Approximately 40% of Evonik's revenues are exposed to food, nutrition and consumer staples end-markets, the highest proportion among diversified chemicals peers covered, according to Jefferies.
Lanxess shares rebounded 53% from a March trough following the Envalior-related sell-off, while consensus FY26 EBITDA rose only 9%.
Jefferies set its FY26 EBITDA estimate for Lanxess at €477 million, 5% below the company's guidance midpoint. Net debt to EBITDA was expected to remain around 4.1 times excluding pensions through 2026.
Jefferies pushed its base case for an Envalior cash injection to 2028, deriving an equity value for the stake of €327 million, or approximately €3.80 per share.
Across the sector, Jefferies flagged that consensus implies a second-half 2026 contribution of 48.5% of full-year earnings versus a five-year historical average of 46.4%, a skew the bank described as demanding given H1 volumes were likely flattered by pre-buying.
German industrial production fell 2.8% year-on-year in March 2026, construction PMIs dropped 8% month-on-month in April and were down 11% year-on-year, and European light vehicle production was forecast to fall 2.4% in 2026.
European gas prices were projected at $17.10 per million British thermal units for 2026 and $14 per million BTU for 2027, remaining around 2.5 times U.S. levels at the mid-term assumption of $10 per million BTU.
