Dow Downgraded to Underperform by BofA on Oversupply Concerns

BofA Securities downgraded Dow Inc. (NYSE: DOW) to Underperform from Neutral, while raising its price target to $35 from $31.

The firm cited concerns about structural oversupply in the chemical industry and what it views as an unsustainable earnings environment currently reflected in the stock’s valuation, with shares having risen approximately 71% year to date.

BofA noted that forecasting earnings for 2026 remains challenging, with the potential for strong results driven by geopolitical factors such as the Iran conflict. However, the firm expressed reluctance to assign significant value to what it considers temporary “overearning.”

While acknowledging that the conflict may provide some lasting support, including higher crude prices due to regional instability, the firm expects petrochemical pricing to weaken meaningfully following a projected peak in the second quarter of 2026.

Over the longer term, BofA anticipates that as market conditions normalize, investor focus will shift toward sustainable earnings levels. Additionally, the firm expects the conflict to resolve without significant capacity reductions, which could further pressure pricing.

As a result, the firm believes the stock is likely to face downside risk over the next 12 months.