Braskem (NYSE:BAK) Shares Gap Down - What's Next?

Key Points

• Braskem shares fell at the open, dropping from a previous close of $1.77 to $1.68 before trading near $1.83, with roughly 752,000 shares changing hands.
• Analyst sentiment is strongly negative: three analysts rate the stock Hold and six rate it Sell, producing a consensus “Strong Sell” rating and a $2.56 target price. UBS and HSBC recently cut their targets to $1.50.
• Braskem reported a loss-making quarter, including a negative 7.28% net margin and negative 67.75% return on equity, although revenue reached $4.20 billion and analysts expect $1.58 in full-year EPS.

Braskem S.A. (NYSE:BAK - Get Free Report) shares gapped down prior to trading on Thursday. The stock had previously closed at $1.77, but opened at $1.68. Braskem shares last traded at $1.8250, with a volume of 751,963 shares trading hands.

Analyst Ratings Changes

BAK has been the topic of several recent research reports. Weiss Ratings reiterated a "sell (e+)" rating on shares of Braskem in a research report on Friday, July 17th. JPMorgan Chase & Co. cut shares of Braskem from an "overweight" rating to a "neutral" rating in a research report on Tuesday, June 30th. Citigroup lowered shares of Braskem from a "neutral" rating to a "sell" rating in a report on Thursday, June 25th. UBS Group cut shares of Braskem from a "neutral" rating to a "sell" rating and cut their price objective for the company from $4.00 to $1.50 in a research note on Tuesday, September 15th. Finally, HSBC lowered shares of Braskem from a "buy" rating to a "hold" rating and reduced their target price for the company from $6.50 to $1.50 in a report on Monday, September 28th. Three investment analysts have rated the stock with a Hold rating and six have issued a Sell rating to the company's stock. According to MarketBeat, the company presently has a consensus rating of "Strong Sell" and a consensus target price of $2.56.

Braskem Price Performance

The stock has a market cap of $739.40 million, a PE ratio of -0.76, a price-to-earnings-growth ratio of 0.10 and a beta of 1.56. The business has a 50 day moving average price of $1.88 and a two-hundred day moving average price of $2.92.

Braskem (NYSE:BAK - Get Free Report) last issued its earnings results on Friday, June 26th. The company reported $1.61 EPS for the quarter. Braskem had a negative net margin of 7.28% and a negative return on equity of 67.75%. The company had revenue of $4.20 billion for the quarter. On average, sell-side analysts forecast that Braskem S.A. will post 1.58 earnings per share for the current fiscal year.

Hedge Funds Weigh In On Braskem

A number of hedge funds have recently modified their holdings of BAK. Engineers Gate Manager LP boosted its holdings in shares of Braskem by 192.8% during the second quarter. Engineers Gate Manager LP now owns 68,198 shares of the company's stock worth $166,000 after purchasing an additional 44,905 shares during the period. Citadel Advisors LLC purchased a new position in Braskem during the 2nd quarter valued at about $89,000. Ramsey Quantitative Systems purchased a new position in Braskem during the 2nd quarter valued at about $155,000. Bank of America Corp DE increased its holdings in Braskem by 178,471.4% during the 1st quarter. Bank of America Corp DE now owns 50,000 shares of the company's stock valued at $183,000 after purchasing an additional 49,972 shares during the period. Finally, Brooklands Fund Management Ltd bought a new position in Braskem during the 1st quarter valued at approximately $2,013,000.

About Braskem

Braskem SA is a Brazilian petrochemical company headquartered in São Paulo, Brazil. The company produces basic chemicals and thermoplastic resins used in packaging, construction, automotive components, consumer goods, agriculture, and other industrial applications.

Its product portfolio includes olefins such as ethylene and propylene, polyolefins including polyethylene and polypropylene, polyvinyl chloride (PVC), caustic soda, and other chemical intermediates. Braskem also markets renewable polyethylene under the “I'm green” brand, which is made from sugarcane-based ethanol.

Established in 2002 through the consolidation of petrochemical assets in Brazil, Braskem expanded internationally through subsequent acquisitions and investments.

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