Key Takeaways:
- Industry Leader: LyondellBasell is a titan in the global plastics and chemicals market, producing the essential building blocks for everything from food packaging to car parts.
- Price Projection: If current recovery trends hold, the stock could climb to $52.80 per share by December 2027.
- Expected Returns: This target represents a total return of 24% from the current price of $42.65.
- Annual Growth: Investors are looking at a potential 11% annual gain over the next two years.
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LyondellBasell Industries (LYB) isn’t just a chemical company; it’s a provider of the fundamental materials that fuel modern life. Despite its importance, the company is currently navigating one of the most prolonged downturns the chemical industry has seen in decades.
In the third quarter of 2025, LYB reported earnings of $1.01 per share. With a market cap of $13.8 billion, the stock is currently offering a massive 11% dividend yield.
While a double-digit yield often makes investors nervous about sustainability, it also suggests the stock might be significantly undervalued.
Let’s dive into whether this chemical giant is ready to bounce back after a 42% decline in 2025.
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What the Model Says for LYB Stock
To estimate LYB’s future, we considered two main factors: the global reduction in chemical production capacity and the company’s internal “cash improvement” plan.
Our model uses a conservative forecast. We accounted for a 10.4% revenue decline (reflecting the current industry slump) and operating margins of 6.3%.
Based on these numbers, we project the stock will rise from $42.65 to $52.80 over the next two years.
This assumes a 12x price-to-earnings (P/E) multiple. While this is slightly lower than where it sits today, it’s a fair middle ground compared to the company’s long-term historical average.
Our Valuation Assumptions
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Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for LYB stock:
1. Revenue Growth: 6.4%
It sounds strange to be optimistic about a revenue decline, but in the cyclical world of chemicals, timing is everything.
LYB is currently at the bottom of a cycle, but several “one-time” headwinds are disappearing:
- Maintenance & Weather: In 2025, a major plant turnaround in Channelview and unexpected winter storms cost the company roughly $260 million. These costs won’t repeat in 2026, giving earnings an immediate “reset” higher.
- Demand is Returning: Global demand for polyethylene (used in plastic bags and bottles) has returned to its long-term growth rate of 3% per year.
- Supply is Shrinking: This is the most crucial part of the forecast. About 10% of global supply—roughly 21 million tonnes—is scheduled to be shut down by 2028. As these older, inefficient plants in Europe, Japan, and China close, LYB’s modern, low-cost plants become much more valuable.
2. Operating margins: 6.3%
LYB is currently obsessed with efficiency. Management has launched a $1.1 billion cash improvement plan to squeeze more profit out of every dollar earned. They are doing this through three primary levers:
- Lower Spending: LYB has significantly reduced capital expenses (CapEx), from a planned $2.2 billion to $1.7 billion, with further cuts planned for 2026.
- Efficiency Gains: New high-tech facilities, like the Hyperzone polyethylene plant, are coming online and are expected to add $170 million in annual improvements.
- Portfolio Cleanup: LYB is selling off some of its less profitable European assets. This removes the “dead weight” and focuses the company on its most profitable hubs.
3. Exit P/E Multiple: 12x
Currently, the market is pricing LYB at about 14.4x its expected earnings. We chose a more conservative 12x multiple for our 2027 projection.
There are concerns about the 11% dividend yield, but the company has been proactive. They’ve increased their cash reserves to $3.4 billion—double their usual cushion—and renegotiated their debt to ensure they have plenty of breathing room.
As the industry’s supply-and-demand balance corrects itself, the market is likely to reward the stock with a higher valuation.
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What Happens If Things Go Better or Worse?
Chemical stocks are sensitive to the global economy. Here is how LYB could perform in different scenarios through 2027:
- Low Case: If the industry slump lasts longer and margins drop to 4.4%, the stock could still deliver a 13% annual return (supported mainly by the dividend and current low price).
- Mid Case: With stable margins and a modest recovery, we expect an 17% annual return.
- High Case: If plant closures accelerate and the housing market (a big buyer of chemicals) rebounds, returns could jump to 19% annually.
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LyondellBasell is a low-cost producer sitting in a high-cost world. With $1.1 billion in cost savings on the way and a massive chunk of global competition shutting down, the company is positioning itself to be much more profitable when the cycle eventually turns.
How Much Upside Does LYB Stock Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
