Argus Believes Oil Price Volatility A Headwind For LyondellBasell

Argus maintained its Hold rating on LyondellBasell Industries NV (NYSE: LYB) saying fluctuating oil prices should result in volatile earnings at the company.

"Despite the recent rebound in crude oil pricing, which has a strong impact on the pricing of many Lyondellproducts, including ethylene, polyethylene, propylene, oxygenated fuels and acetyls, we do not believe that crude prices are sustainable at current levels," analyst Bill Selesky wrote in a note.

"We look for continued oil price volatility in the near term, leading to an uneven trend of both rising and falling earnings for LYB," Selesky noted.

The analyst cut his 2016 EPS estimate to $9.65 from $9.67 to reflect the weaker-than-expected second quarter results and his expectations for slightly softer global economic conditions in the second half, which could weigh on sales of ethylene, crude oil, olefins and polyolefins. The current consensus is $9.54.

In addition, Selesky maintained his 2017 estimate of $9.80, implying about 2 percent growth from 2016 EPS estimate. The 2017 consensus is $9.67.

In the current scenario, Selesky remains cautious about the stock, and looks for greater stability in oil prices and sustainable sales growth before becoming constructive on the stock.

At time of writing, shares of LyondellBasell were down 0.26 percent to $76.99.