Balancing Near-Term Headwinds and Long-Term Efficiency Gains: Justifying a Hold on Dow

Analyst Vincent Andrews from Morgan Stanley maintained a Hold rating on Dow Inc and keeping the price target at $27.00.

Vincent Andrews has given his Hold rating due to a combination of factors tied to both near-term headwinds and improving longer-term prospects. His updated model incorporates weaker first-quarter performance than the market anticipates, including softer guidance and a more modest benefit from polyethylene price increases than what appears implied in management commentary. He also factors in continued earnings pressure in the Industrial, Infrastructure & Institutional segment, where demand from construction and automotive markets remains under strain and margins are being squeezed. In addition, his estimates reflect mark-to-market adjustments for key commodities and energy inputs such as natural gas, ethane, and ethylene, which introduce further earnings volatility in the near term.
At the same time, Andrews recognizes that Dow is positioned to benefit from its multi-year cost-reduction and efficiency program, “Transform to Outperform,” where he models a meaningful uplift from structural cost savings beginning in 2026 and 2027. His revised EBITDA projections for 2027 and 2028 are notably higher than consensus, reflecting an expectation of margin recovery and operational improvement over time. However, the combination of short-term earnings weakness, cyclical and input-cost uncertainties, and a gradual realization of cost benefits leads him to conclude that the current share price appropriately balances risks and rewards. As a result, he views the stock as fairly valued at present, supporting a Hold rather than a more aggressive Buy or a more negative Sell stance.

According to TipRanks, Andrews is a 3-star analyst with an average return of 1.2% and a 61.26% success rate. Andrews covers the Basic Materials sector, focusing on stocks such as LyondellBasell, PPG Industries, and Sherwin-Williams Company.

In another report released today, Bank of America Securities also maintained a Hold rating on the stock with a $27.00 price target.