Analyst Note| Rob Hales, CFA |
Narrow-moat BASF reported fourth-quarter EBIT of EUR 1.1 billion, which was exactly in line with the January prerelease. More importantly, management's tone on the conference call was notably positive on 2021 with expected growth in automotive being highlighted. Guidance for 2021 calls for sales of EUR 61 million-64 billion and EBIT of EUR 4.1 billion-5.0 billion. However, confidence in the top end of the range was indicated save for a drastic turn in the coronavirus pandemic. The top end of guidance is a bit higher than our current forecast but broadly in line with consensus. We expect to tweak our numbers upward but don’t expect to make a material change to our EUR 63 fair value estimate. At current levels, the shares look fairly valued.