Why JPMorgan Analysts Downgrade Dow Chemical (DOW), LyondellBasell (LYB), and Tesla (TSLA)

Many retail investor are licking their wounds after suffering through one of the most turbulent weeks in recent memory. Undoubtedly, there seems to be risks on both sides as President Trump gets busy negotiating with a long list of nations during the 90-day pause while contemplating the next steps with China after imposing 145% tariffs. At this pace, China views such tariffs as a “joke,” and it doesn’t look like they’re willing to respond to any further escalation. As to whether we’ve hit an upward limit to the trade spat remains the big question.

Either way, the next 90 days are sure to be choppy, as corporate earnings are also thrown into the equation again. Sure, it’s been almost all about tariffs and Trump since Liberation Day gut-punched the S&P 500. As firms reposition themselves to brace for impact (for instance, Apple (NASDAQ:AAPL) is rushing to ship tons of iPhones to America), they’ll still need to serve up some quarterly earnings over the coming weeks and months. But perhaps more importantly, it’s the guidance and the expected impact of tariffs that will move the needle by the most as executives answer what are sure to be ample questions from investors and analysts.

Amid the tariff-fueled correction, many big-name analysts have dialed back their expectations and price targets for the S&P 500 as well as individual companies. If we’re flying into headwinds and a recession, investors must brace for such downgrades as analysts lower the bar on expectations ahead of potential bear-case scenarios revolving around tariffs.

In this piece, we’ll have a closer look at a trio of recent JPMorgan (NYSE:JPM) downgrades and ask ourselves if there’s an opportunity to buy as Wall Street starts lowering the bar.

Dow Chemical

Dow Chemical (NYSE:DOW) shares have been crumbling under the pressure in the past month, now down around 21% in the past month and close to 60% from 2021 all-time highs. The latest JPMorgan downgrade to neutral from overweight isn’t helping the stock bottom out, with analysts recently decreasing their price target to $31.00 from $40.00 per share. Higher raw material costs and “faltering” demand were part of the reason behind the major downgrade. Add tariff risks into the equation, and the dip in Dow seems like one to be passed over.

At the time of this writing, DOW stock trades for 13.6 times forward price-to-earnings (P/E) alongside a huge 9.93% dividend yield. Shares are cheap and the dividend remains bountiful. But risks remain, and the potential headwinds could make it tough on investors looking to bottom-fish.

LyondellBasell

LyondellBasell (NYSE:LYB) shares are fresh off a 22% plunge in the past month, thanks in no small part to a slew of downgrades. JPMorgan’s Jeffrey Zekauskas thinks the current climate will continue to be difficult for LyondellBasell, as headwinds weigh down margins. From trade risks, to weakening demand, to higher raw material costs, LyondellBasell seems to be in a similar boat as Dow Chemical. Either way, Zekauskas’ downgrade to $60 from $80 alongside a neutral rating seems more than warranted.

JPMorgan wasn’t the only big name to downgrade LYB stock in April, either. RBC Capital recently downgraded the name, citing tariffs and oversupply as potential things to watch out for. At 8.8 times forward P/E, with a 9.24% dividend yield, shares may be tempting for dip-buyers willing to average down.

Tesla

Finally, Elon Musk’s Tesla (NASDAQ:TSLA) got slapped with another downgrade. This time, JPMorgan cut its estimate as it stuck with an underweight recommendation and a mere $120 per-share price target, which implies shares could shed more than half of their value from current levels.

Notably, JPMorgan cited “unprecedented brand damage” as an added headwind that could exacerbate Tesla stock’s next leg lower. Even as Elon Musk departs the Department of Government Efficiency (DOGE), it’ll be hard to undo the damage that’s already been done. With few thinking about Cybercab and robotaxis at this juncture, perhaps TSLA is one of the Mag Seven stocks to bail from as the polarizing vehicle looks to run into a roadblock.

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