Arkema: Attractive Portfolio but Transformation Not Yet Complete; 5% FVE Lift on Analyst Transfer

We raise our fair value estimate for Arkema by 5% to EUR 110 following a transfer of coverage and a fresh look at the business, including an update of our expectations for the strategic cycle 2024-28. During this time, Arkema should see strong demand for its specialty materials coming from key submarkets, such as electric mobility, efficient buildings, and sustainable lifestyle. The stock has underperformed recently as the company’s bottom line has been impacted by widespread customer destocking and weak demand in 2023. Although management expects volumes to remain weak in the first part of 2024, the profit decline should be short-lived, with little long-term impact. At current levels, we believe the share price offers an upside of around 15% for patient investors.