Shares of LyondellBasell Industries NV LYB, +0.60% dropped 2.2% in premarket trade Wednesday, after J.P. Morgan turned bearish on the chemical company, citing the recent sharp rise in feedstock costs. Analyst Jeffrey Zekauskas cut his rating to underweight, after being at neutral since June 2016. He also slashed his stock price target to $95, which is 7% below Tuesday's closing price, from $110. Zekauskas said his new bearish stance is driven primarily by the big jump in ethane prices, which has increased 50% since August. "The supply/demand characteristics of ethane are much tighter than had been understood previously," Zekauskas wrote in a note to clients. "We believe that the raw material volatility undermines confidence in Lyondell's business forecasts for 2019." The stock has lost 8.2% over the past three months, while the SPDR Materials Select Sector ETF XLB, +1.09% has tacked on 2.0% and the S&P 500 SPX, +0.13% has gained 5.1%.
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