LyondellBasell
LYB
$58.00
-0.94%
LyondellBasell is a global petrochemical producer and the world's largest manufacturer of polypropylene, also producing polyethylene and propylene oxide for consumer and industrial applications. As a market leader in the chemicals sector, it operates primarily in North America, Europe, and Asia, with over half of its production from North America. The current investor narrative centers on the company navigating one of the longest downturns in the chemical industry, as evidenced by a recent dividend cut and supply chain disruptions from Middle East tensions, while investors debate the timing of a cyclical recovery and the impact of cost-saving initiatives.…
LYB
LyondellBasell
$58.00
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Investment Opinion: Should I buy LYB Today?
Rating: Hold. LYB is a cyclical value play with deep valuation discounts but significant near-term headwinds. The analyst consensus is 'hold' with an average target of $69.24, implying 19.4% upside. However, the fundamental deterioration and negative cash flow warrant caution.
Supporting Evidence: The forward P/E of 8.7x is near historical lows, and the P/S of 0.46x is a deep discount to the historical average of 3.6x. Revenue is declining at -6.3% YoY, and gross margins have compressed from 16.5% to 9.7%. Free cash flow over the trailing twelve months is $2.786 billion, but the recent quarterly cash burn is concerning. The implied upside to the average analyst target is 19.4%, but the wide range ($48-$95) reflects high uncertainty.
Risks & Conditions: The biggest risks are a prolonged industry downturn, further cash flow deterioration, and potential dividend suspension. This Hold would upgrade to Buy if the forward P/E compresses below 7x or if gross margins stabilize above 12%. It would downgrade to Sell if operating cash flow remains negative for two consecutive quarters or if the dividend is cut again. Overall, LYB appears undervalued on a forward basis but fairly valued given the cyclical risks.
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LYB 12-Month Price Forecast
LYB is a classic cyclical stock at a potential trough. The valuation is cheap on forward earnings and sales, but the fundamental data shows ongoing deterioration. The neutral stance reflects the balance between deep value and real operational distress. The key factor to watch is whether gross margins can stabilize and free cash flow turns positive in the coming quarters. An upgrade to bullish would require evidence of a demand recovery, while a downgrade to bearish would follow further cash burn or dividend cuts.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on LyondellBasell's 12-month outlook, with a consensus price target around $69.24 and implied upside of +19.4% versus the current price.
Average Target
$69.24
0 analysts
Implied Upside
+19.4%
vs. current price
Analyst Count
—
covering this stock
Price Range
$48 - $95
Analyst target range
The stock is covered by 17 analysts, with a consensus recommendation of 'hold' (mean 2.72 on a 1-5 scale). The average target price is $69.24, implying 19.4% upside from the current price of $58.00. The distribution includes 1 buy, 1 overweight, 2 neutral, 1 market perform, and 1 underperform, reflecting a cautious but not bearish consensus. The target range spans from a low of $48.00 to a high of $95.00, a wide spread of $47.00, indicating high uncertainty. The high target of $95.00 assumes a strong cyclical recovery and multiple expansion, while the low target of $48.00 prices in continued margin compression and potential dividend cuts. Recent ratings actions show a mix: Wells Fargo upgraded from Equal Weight to Overweight in May 2026, while B of A maintains Underperform, and Citigroup reiterated Buy. The wide spread and mixed revisions suggest low conviction among analysts, typical of a cyclical trough.
Bulls vs Bears: LYB Investment Factors
LYB presents a classic cyclical value trap debate. On the bull side, the stock trades at a deep discount on P/S (0.46x) and forward P/E (8.7x), with analyst targets offering 19.4% upside and strong free cash flow providing a buffer. On the bear side, the dividend cut, negative operating cash flow, collapsing margins, and negative ROE signal fundamental distress. The single most important tension is whether the current downturn is a cyclical trough that will reverse, or a structural decline in petrochemical profitability. The bear case currently has stronger evidence given the cash flow deterioration and margin compression, but the valuation already prices in significant pessimism. The outcome hinges on the timing and strength of a global chemical demand recovery.
Bullish
- Deep Cyclical Value at 0.46x Sales: The P/S ratio of 0.46x is well below the historical average of 3.6x, suggesting the stock is pricing in a severe downturn. If earnings normalize, significant upside exists.
- Forward P/E of 8.7x Implies Recovery: Despite negative trailing earnings, the forward P/E of 8.7x is near the low end of its historical range (4.2x-53.0x), indicating the market expects a sharp earnings rebound. This creates a margin of safety for patient investors.
- Analyst Target Upside of 19.4%: The average analyst price target of $69.24 implies 19.4% upside from the current $58.00. Even the low target of $48.00 is only 17% below current levels, limiting downside risk.
- Strong Free Cash Flow Generation: Trailing twelve-month free cash flow is $2.786 billion, providing a cushion for debt service and capital allocation. This supports the dividend even after the cut.
Bearish
- Dividend Cut Signals Distress: In February 2026, LYB slashed its dividend, citing 'one of the longest downturns in the chemical industry.' The payout ratio is now -2.37x, indicating the dividend is not covered by earnings.
- Negative Operating Cash Flow in Q1 2026: Operating cash flow was -$269 million and free cash flow was -$538 million in Q1 2026, signaling cash generation stress. This raises concerns about the company's ability to fund operations without debt.
- Gross Margin Collapse to 9.7%: Gross margin has fallen from 16.5% in Q2 2024 to 9.7% in Q1 2026, reflecting severe industry headwinds. Net margin is a razor-thin 1.7%, leaving no room for error.
- Negative ROE of -7.4%: Return on equity is negative, indicating the company is destroying shareholder value. This is a red flag for long-term investors seeking compounding returns.
LYB Technical Analysis
The stock is in a significant downtrend from its 52-week high of $83.94, currently trading at $58.00, which is 69.1% of the 52-week range. The 1-year price change is -7.1%, underperforming the S&P 500's +20.9% gain, indicating sustained relative weakness. The current price sits well below the midpoint, suggesting bearish sentiment and potential value trap risks. Short-term momentum is decisively negative: the 1-month change is -8.4% and the 3-month change is -23.0%, both sharply worse than the S&P 500's +0.6% and +6.3% respectively. This divergence from the longer-term 1-year trend (which is only -7.1%) signals that selling pressure has intensified recently, potentially indicating a breakdown rather than a mere pullback. The stock's beta of 0.36 implies it is significantly less volatile than the market, meaning the recent sharp declines are unusual and may reflect company-specific distress. Key support is the 52-week low of $41.58, while resistance is the 52-week high of $83.94. A break below $41.58 would signal a new leg down, while a move above $83.94 would require a fundamental catalyst. Given the low beta, the stock's recent 23% drop in three months is outsized relative to its typical behavior, suggesting heightened risk.
Beta
0.36
0.36x market volatility
Max Drawdown
-37.1%
Largest decline past year
52-Week Range
$42-$84
Price range past year
Annual Return
-7.1%
Cumulative gain past year
| Period | LYB Return | S&P 500 |
|---|---|---|
| 1m | -8.4% | +0.6% |
| 3m | -23.0% | +6.3% |
| 6m | +13.9% | +9.1% |
| 1y | -7.1% | +20.9% |
| ytd | +30.7% | +10.7% |
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LYB Fundamental Analysis
Revenue has been declining: Q1 2026 revenue was $7.197 billion, down 6.3% year-over-year from $7.677 billion in Q1 2025. The multi-quarter trend shows revenue falling from $8.678 billion in Q2 2024 to $7.197 billion in Q1 2026, indicating a persistent deceleration. Segment data reveals Polyethylene ($1.681B) and Polypropylene ($1.344B) are the largest contributors, but overall weakness suggests broad-based demand softness. The company is barely profitable: Q1 2026 net income was $125 million, with a gross margin of 9.7% and a net margin of 1.7%. Margins have compressed dramatically from Q2 2024's gross margin of 16.5% and net margin of 10.6%, reflecting severe industry headwinds. The Q4 2025 net loss of -$140 million and Q3 2025 loss of -$892 million highlight the cyclical trough. The balance sheet shows a debt-to-equity ratio of 1.58 and a current ratio of 1.77, indicating moderate leverage but adequate liquidity. Free cash flow over the trailing twelve months was $2.786 billion, but Q1 2026 operating cash flow was -$269 million, and free cash flow was -$538 million, signaling cash generation stress. ROE is negative at -7.4%, reflecting the recent losses and elevated equity base.
Quarterly Revenue
$7.2B
2026-03
Revenue YoY Growth
-6.3%
YoY Comparison
Gross Margin
9.7%
Latest Quarter
Free Cash Flow
$2.8B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is LYB Overvalued?
Since net income is positive ($125 million in Q1 2026), the primary valuation metric is the P/E ratio. The trailing P/E is -18.4x (due to negative earnings over the trailing twelve months), while the forward P/E is 8.7x, implying the market expects a sharp earnings recovery. The gap between negative trailing and positive forward P/E highlights deep cyclical trough expectations. Compared to the industry, the stock's P/S ratio of 0.46x is well below the historical average (e.g., 3.6x in Q1 2026 historical ratio), suggesting a deep discount. However, the EV/EBITDA of 22.3x is elevated relative to historical levels (e.g., 60.9x in Q1 2026 historical ratio), reflecting the depressed EBITDA base. Historically, the trailing P/E has ranged from 4.2x (Q2 2021) to 53.0x (Q1 2026), and the current forward P/E of 8.7x is near the lower end of that range, indicating the market is pricing in a trough valuation. The P/B ratio of 1.38x is also near the lower end of its historical range (1.38x to 3.26x), suggesting the stock may be undervalued if earnings recover.
PE
-18.4x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 4x~33x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
22.3x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: LYB's financial health is under severe strain. The company posted a net loss of -$140 million in Q4 2025 and -$892 million in Q3 2025, with a net margin of only 1.7% in Q1 2026. Operating cash flow turned negative at -$269 million in Q1 2026, and free cash flow was -$538 million, despite a trailing twelve-month free cash flow of $2.786 billion. The debt-to-equity ratio of 1.58x indicates moderate leverage, but the negative ROE of -7.4% suggests the company is not generating sufficient returns to cover its cost of capital. The dividend cut in February 2026 further underscores cash flow constraints and management's cautious outlook.
Market & Competitive Risks: LYB is highly sensitive to global economic cycles and commodity prices. The stock's 1-year price change of -7.1% significantly underperformed the S&P 500's +20.9%, and the 3-month decline of -23.0% relative to the S&P 500's +6.3% indicates severe relative weakness. The beta of 0.36 suggests low market correlation, but the recent sharp drops are company-specific. Competitive pressures from low-cost producers in the Middle East and Asia, along with overcapacity in polypropylene and polyethylene, could prolong the downturn. Regulatory risks include environmental policies that may increase costs for petrochemical producers.
Worst-Case Scenario: In a prolonged downturn with no recovery in chemical demand, LYB could face further margin compression, additional dividend cuts, and potential covenant breaches. The 52-week low of $41.58 represents a 28.3% downside from the current price of $58.00. If the company reports continued negative free cash flow and earnings disappointments, the stock could test that low. Analysts' low target of $48.00 implies a 17.2% decline. In a severe recession, the stock could fall to $41.58, resulting in a loss of approximately 28% from current levels.
FAQ
The primary risks are: 1) Financial: Negative operating cash flow (-$269M in Q1 2026) and a dividend cut signal cash stress; net margin is only 1.7%. 2) Cyclical: The petrochemical industry is in a prolonged downturn with gross margins falling from 16.5% to 9.7%. 3) Competitive: Low-cost producers in the Middle East and Asia could keep margins compressed. 4) Macro: A recession in key markets would further reduce demand. The most severe risk is a continued cash burn leading to debt downgrades or a dividend suspension, which could push the stock to the 52-week low of $41.58.
The 12-month forecast is uncertain, with three scenarios: Bull case (25% probability) targets $75-$95, driven by a rapid economic recovery and margin expansion. Base case (50% probability) targets $60-$75, assuming gradual improvement and the stock reaching the analyst average of $69.24. Bear case (25% probability) targets $42-$55, with a prolonged downturn pushing the stock to the 52-week low of $41.58. The base case is most likely, but the wide range reflects high uncertainty. Key assumptions include global chemical demand growth of 2-3% and gross margins stabilizing around 12%.
LYB appears undervalued on a forward basis but fairly valued given current earnings. The forward P/E of 8.7x is near the low end of its historical range (4.2x-53.0x), and the P/S of 0.46x is a deep discount to the historical average of 3.6x. However, the trailing P/E is negative (-18.4x) due to recent losses, and the EV/EBITDA of 22.3x is elevated because EBITDA is depressed. Compared to the industry, the stock is cheap on sales but not on enterprise value. The market is pricing in a recovery, but if the downturn persists, the stock could be fairly valued or even overvalued.
LYB is a high-risk, high-reward cyclical value play. The stock trades at a deep discount with a forward P/E of 8.7x and P/S of 0.46x, offering 19.4% upside to the average analyst target of $69.24. However, the company is in the midst of a severe downturn, with negative operating cash flow in Q1 2026, a dividend cut, and collapsing margins. It is a good buy only for investors who believe the chemical cycle is near a trough and can tolerate a potential 28% decline to the 52-week low of $41.58. For conservative investors, it is too risky; for contrarian value investors with a long horizon, it may offer asymmetric upside.
LYB is more suitable for long-term investment (3-5 years) given its cyclical nature and current trough. Short-term trading is risky due to high volatility (3-month decline of 23%) and negative momentum. The low beta of 0.36 means it is less correlated with the market, but recent moves have been company-specific. For long-term investors, the deep valuation and potential for a cyclical recovery offer attractive upside, but patience is required. A minimum holding period of 2-3 years is recommended to allow for the industry cycle to turn.