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Covestro: Preliminary EBITDA Exceeds Guidance and Vara Consensus

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No-moat Covestro 1COV disclosed preliminary financial data for the first quarter of 2023. The company reported EBITDA of EUR 286 million, which exceeded Vara consensus of EUR 158 million and the previous guidance of EUR 100 million-EUR 150 million. The company’s measures to reduce costs had a significant impact on improving its financial performance in a challenging market environment. However, the sales figures were below expectations, driven by weaker demand. At this point, we don’t expect to make a material change to our EUR 52 fair value estimate. At current levels, the shares look undervalued.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Author

Rob Hales

Senior Equity Analyst
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Rob Hales, CFA, is a senior equity analyst for Morningstar Holland BV, a wholly owned subsidiary of Morningstar, Inc. Based in Amsterdam, he covers the European chemicals sector, as well as the engineering and construction and pulp and paper industries.

Before joining Morningstar in 2015, Hales spent five years in equity research covering gold-mining stocks for BMO Capital Markets and CIBC World Markets. Previously, he worked for several years as a credit analyst for an energy trading company and a Canadian bank.

Hales holds a bachelor’s degree in business administration from Simon Fraser University and a master’s degree in business administration from the Ivey Business School at Western University. He also holds the Chartered Financial Analyst® designation.

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