Lanxess: Jefferies inches up target price.

(CercleFinance.com) - Jefferies maintains its "hold" rating on Lanxess, while inching up its target price on the stock from 38 euros to 39 euros, saying that Berkshire Hathaway's 3% stake should be "incrementally positive" for sentiment.


The broker points out that the stake represents a return to one of the Buffet investment firm's least successful investments, as in 1999 Berkshire Hathaway acquired 6.8% of Great Lakes Chemical, one of Lanxess' predecessors.

The stake was then reduced to 1.1% in 2003, Jefferies says, pointing out that the US chemical company was then in a complicated situation due to severe competitive pressure.

Things could be different this time, it adds.

"Based on how other chemical companies have traded with such ownership positions, Lanxess should have a "soft cushion" that mitigates downside volatility in the absence of structurally-significant headwinds," Jefferies writes in a report.

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