LYB

Technical Analysis

LYB shows recent positive momentum with an 8% monthly gain, modestly outperforming the broader market. However, its price sits much closer to its 52-week low than its high, suggesting it is technically oversold after a significant drawdown. The stock's lower beta may appeal to cautious investors, but its deep volatility over the past year remains a concern.

Fundamentals

The company faces clear challenges, with Q3 2025 showing a sharp deterioration into a net loss despite slight revenue growth. While its debt levels are manageable, the negative interest coverage ratio indicates earnings are insufficient to service interest payments. Operational efficiency is weak, reflected in negative returns on equity and assets, pointing to strained profitability.

Valuation

Valuation sends mixed signals: a high TTM P/E and negative forward ratios highlight earnings pressure, yet the very low price-to-sales and PEG ratios suggest the market may be pricing in strong future growth. Without direct peer comparisons, it's unclear if LYB is undervalued, but the low multiples on sales and growth are notable.

Risk Assessment

LYB carries moderate volatility risk with a lower beta, but its large maximum drawdown warns of potential steep declines in downturns. The lack of short interest reduces near-term pressure, but the stock remains exposed to commodity price swings and economic cycles affecting chemical demand.

Investment Recommendation

Neutral to Cautious Buy. LYB's deeply negative profitability and operational inefficiencies are significant headwinds, making it a speculative pick. However, its oversold technical position and attractive sales-based valuation could offer upside if the company executes a turnaround or benefits from cyclical recovery. Investors should monitor quarterly earnings for signs of improvement and consider it only as a high-risk, potential recovery play within a diversified portfolio.

RockFlow Model Forecast: Three Scenarios for 2026

Based on the comprehensive analysis, here is a 12-month outlook for LYB:

Catalysts: The primary catalyst for a potential rebound is an improvement in cyclical demand for chemicals, which would directly benefit LYB's strained profitability. Its deeply oversold technical position and attractive price-to-sales valuation could attract speculative capital betting on a broader sector recovery. Execution on operational efficiency and a return to positive earnings would be the most significant internal catalysts.

Risks: The foremost risk is the continuation of weak fundamentals, including negative earnings and an inability to cover interest payments, which could lead to further deterioration. LYB remains highly exposed to volatile commodity prices and an economic downturn that would suppress chemical demand. The stock's history of a large maximum drawdown warns of potential for significant losses if the anticipated recovery fails to materialize.

Outlook: Given the absence of a specific analyst target, a target price range is challenging; however, a successful cyclical recovery could push the stock toward the $55-$65 range, while persistent challenges could see it retest lows near $40. The outlook is highly speculative, leaning on a hopeful macroeconomic improvement rather than strong company-specific fundamentals. A neutral stance is warranted, with any position sized appropriately for its high-risk nature.

Wall Street Consensus

Most Wall Street analysts are optimistic about LYB's 12-month outlook, with consensus target around $52.00, indicating expected upside potential.

Overall, LYB has investment potential but also faces challenges. Here are key factors to weigh before investing.

Overall Assessment

LYB has demonstrated modest gains over the recent quarter, slightly outperforming its market benchmark, despite experiencing a period of significant annual volatility.

Short-term Performance

The stock has shown strong positive momentum over the last month, with a gain of nearly 8%, contributing to a solid 3-month return of 2.1%. This recent outperformance is confirmed by its positive relative strength versus the market (-1.27% actually indicates LYB's 3-month return is 1.27 percentage points *better* than whichever broader market index it is compared to, suggesting it has modestly outperformed the benchmark).

Current Position

LYB's current price is positioned in the lower half of its 52-week range, being significantly closer to its 52-week low of $41.58 than its high of $79.39; based on this range, the stock appears technically oversold, an impression supported by the substantial maximum drawdown of -46.26% over the past year. Its beta of 0.74 indicates lower volatility compared to the broader market, which may appeal to more risk-averse investors.

Revenue & Profitability LyondellBasell (LYB) generated $7.7 billion in Q3 2025 revenue, showing modest sequential growth from $7.66 billion in Q2. However, profitability deteriorated sharply, with the company posting an operating loss of $731 million and a net loss of $892 million in Q3, compared to a net profit of $114 million in the prior quarter. The net profit margin fell to -11.5%, reflecting significant pressure on earnings.

Financial Health The company maintains a reasonable debt profile with a debt-to-equity ratio of 1.25 and a debt ratio of 39%. However, the interest coverage ratio of -5.6 indicates insufficient operating income to cover interest expenses, creating liquidity concerns. The current ratio of 1.57 suggests adequate short-term liquidity, though operating cash flow coverage of debt is weak at 0.07.

Operational Efficiency Operational metrics show challenges, with return on equity deeply negative at -8.4% and return on assets at -2.6%. Asset turnover remains low at 0.23, indicating inefficient utilization of the asset base to generate revenue. The cash conversion cycle of 55 days suggests acceptable working capital management, but overall operational performance is suboptimal.

LYB exhibits conflicting valuation signals across different metrics. The TTM PE ratio of 47.59 appears elevated for a commodity chemical company, suggesting potential overvaluation, while negative forward PE and EV/EBITDA ratios indicate current earnings challenges. However, the PB ratio of 1.46 implies reasonable asset valuation, and the remarkably low PS ratio of 0.46 combined with the extremely low PEG ratio of 0.005 suggests strong growth expectations relative to the current price.

Without industry average data for comparison, this analysis remains limited. The valuation picture is mixed, with some metrics pointing to potential undervaluation based on sales and growth prospects, while earnings-based metrics reflect current profitability challenges. A complete assessment would require benchmarking these ratios against peer companies in the chemical sector to determine LYB's relative valuation position.

Volatility Risk: LYB exhibits moderate volatility risk, with a beta of 0.739 indicating lower volatility than the broader market. However, its significant one-year maximum drawdown of -46.26% highlights potential for substantial downside price swings, particularly sensitive to industry or macroeconomic downturns. This suggests that while its day-to-day price movements may be dampened, the stock can still experience severe peak-to-trough declines during periods of stress.

Other Risks: The absence of notable short interest implies that investors are not actively betting against the stock, reducing the immediate risk of a short squeeze. Primary risks are therefore more likely to stem from external factors, such as commodity price fluctuations for its chemical products, changes in global demand, and broader economic cycles impacting industrial production. Liquidity is typically adequate for a large-cap company, but spreads may widen during market turmoil.