shares of dow inc dropped monday after keybanc capital analyst aleksey yefremov turned bearish on the chemicals and specialty materials company citing concerns that the “meaningful” exposure to commodities and europe skews the riskversusreward profile to the downside dow’s stock dow fell as much as 35 intraday before paring losses to lose 10 in afternoon trading yefremov cut his rating on the michiganbased 125yearold company to underweight from sector weight saying a “petrochemical recession is likely upon us” he set a stock price target of 45 which implies about 17 downside from current levels following discussions with consultants and companies he cut his thirdquarter estimate for earnings per share to 140 from 169 and his 2022 eps estimate to 710 from 772 that compares with the factset eps consensus estimates of 175 for the third quarter and 799 for the year yefremov said producers like dow are facing higher energy costs not only in europe but in the us to a lesser degree and coupled with improving supply and falling global demand he expects margins to suffer “we see shortterm riskreward for names with meaningful commodity and european exposure skewed to the downside” yefremov wrote in a note to clients “we expect 4q22 margins and earnings to approach ‘trough’ or ‘recession’ levels while we move to subnormalized 2023 estimates” yefremov’s new bearish stance comes after dow jones newswires reported last week that dow told its customers that it would temporarily reduce polyethylene pe operating rates by 15 he believes dow peers lyondellbasell industries nv lyb and westlake corp wlk will follow with their own pe production cuts and also downgraded both companies to underweight from sector weight “we believe this largely has to do with weakening demand in pe markets but also logistical constraints” yefremov wrote “additionally we see downside in pvc polyvinyl chloride where domestic prices are likely to follow exports lower all of this before potential power shortages in europe this winter” shares of dow have tumbled 219 over the past three months while lyondellbasell shares have sunk 261 and westlake’s stock has dropped 214 in comparison the dow jones industrial average djia has declined 29