LyondellBasell Industries (LYB +2.01%) stock enjoyed a month of monster gains in March. The company's share price surged 40.1% higher across the month, dramatically outperforming the S&P 500's 5.1% slide in the period.
LyondellBasell's explosive stock gains stemmed from dynamics connected to the U.S. and Israel's war with Iran -- which kicked off at the end of February. With the war disrupting the flow of oil through the Strait of Hormuz, the U.S.-based petrochemical company has a stronger demand outlook.
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LyondellBasell surges as war creates shifting petrol dynamics
Following the start of the war with Iran, investors and analysts bet that U.S. petrochemical producers would see substantial tailwinds. The dynamic created strong bullish momentum for LyondellBasell stock. With crude oil prices surging, the price for commodity petrochemicals is also seeing upward pressure.
On March 3, KeyBanc published new coverage on LyondellBasell and raised its rating on the stock to overweight from sector weight. The firm also set a one-year price target of $73 per share on the stock.
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KeyBanc analyst Aleksey Yefremov said that he saw rising prices for crude oil boosting commodity prices over the next few quarters. Specific to LyondellBasell's business, the analyst said that between 11% and 15% of global ethylene and polyethylene production is being impacted by the war with Iran. With supply chain disruptions stemming from the war, Yefremov said he saw conditions shifting in favor of U.S.-based suppliers.
Following KeyBanc's report and increases in oil prices, LyondellBasell stock saw various ratings upgrades and price-target increases from other investment firms. RBC Capital raised its rating on the stock from sector perform to outperform on March 9 and raised its one-year target from $51 per share to $82 per share. On March 12, Citi raised its rating on the stock from neutral to buy in response to positive impacts related to supply chain disruptions for other players in the market.
LyondellBasell has fallen in April
On the heels of last month's big gains, LyondellBasell stock has lost some ground in April. The company's share price is down 7.9% in the month so far. Meanwhile, the S&P 500 index is up 3.9%.
In addition to investors betting that the war with Iran could be resolved following the recent ceasefire announcement, analyst coverage may have also played a role in the stock's sell-off. Bank of America updated its coverage on the stock and downgraded its rating from neutral to underperform. While the firm raised its price target from $55 per share to $68 per share, the new target still suggests a downside of roughly 8% as of this writing.
The firm's analysts saw justification compared to their previous valuation target, but they also raised concerns that the rally had gone too far. While disruptive impacts in the petrochemical market connected to the Iran war can be expected to continue for a period extending past a potential resolution, pricing trends will continue to be pivotal for LyondellBasell.
