Lanxess shares fell after JPMorgan downgraded the stock on a weak outlook by Investing.com

Investing.com — Shares of Lanxess AG (ETR: ) was hit after JPMorgan downgraded the stock to “underweight” from “neutral.”

At 5:41 am (0941 GMT), Lanxess was trading 2.8 percent lower at €27.985.

The brokerage cited concerns about the company’s financial outlook, noting that its shares had risen above JPMorgan’s unchanged price target of €26 for December 2025.

The stock was trading at €28.68 before the downgrade was announced.

JPMorgan’s analysis highlighted a challenging macroeconomic environment, marked by uncertainties about the recovery in demand, particularly from China, and continued interest rate cuts in several regions.

Despite Lanxess’ efforts to improve its balance sheet by cutting costs, reducing capital spending and selling assets, the bank remains unconvinced that a substantial turnaround is on the horizon.

One of the main points in JPMorgan’s decision was Lanxess’ weaker margins and return on invested capital compared to its peers.

The brokerage expects Lanxess’s ROIC to remain significantly lower even through 2025, with the company’s debt level remaining relatively high.

In addition, recent portfolio changes and asset sales, including the sale of its urethane systems business, have not led to the kind of financial improvement that would warrant a more favorable rating, according to the bank’s assessment.

JPMorgan also lowered its earnings expectations for Lanxess, adjusting estimates for earnings before interest, taxes, depreciation and amortization for both 2024 and 2025.

The brokerage sees limited upside potential for the stock, especially amid a challenging market environment, and has therefore advised investors to reconsider their exposure to the company.