RBC Capital Markets downgraded Dow to Sector Perform from Outperform and cut its price target to $28 from $51, warning that recent gains in polyethylene prices are likely to prove short-lived while the company's multibillion-dollar Alberta petrochemicals project will continue to strain cash flow. The brokerage said Dow's second-quarter earnings received a significant lift from supply disruptions following the Iran conflict, but expects those benefits to fade in 2027 as structural oversupply and weak global demand continue to weigh on the petrochemicals market. RBC lowered its adjusted EBITDA estimates to $5.30 billion for 2026 and $5.10 billion for 2027, from previous forecasts of $6.0 billion and $6.5 billion, respectively. The brokerage also highlighted Dow's Alberta cracker project as a major overhang, estimating it will require about $7.5 billion in gross capital spending, or roughly $6 billion after government incentives, consuming the bulk of Dow's free cash flow through 2030. RBC noted that Dow's cost-cutting initiatives could deliver roughly $1.6 billion in cumulative savings, but said those efforts are unlikely to fully offset the effects of weak demand and persistent industry overcapacity.
Dow IncRBC downgraded Dow to Sector Perform, cut price target to $28 from $51, and lowered EBITDA estimates.