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Shares of Dow Inc. (DOW) - Get Dow Inc. Report  closed down 4.14% to $57.24 Friday, after JPMorgan initiated coverage of the materials science company with an underweight rating and a target price of $49.

Analyst Jeffrey Zekauskas said in a research note to investors that he believes Dow trades at a premium to its peers, LyondellBasell (LYB) - Get LyondellBasell Industries NV Class A (Netherlands) Report and Westlake Chemical  (WLK) - Get Westlake Corporation Report , because of its larger dividend.

Zekauskas said he believes the market has yet to see the low point of domestic ethylene and polyethylene margins for 2019-2020, and adds that Dow's earnings and trading multiples are sensitive to oil prices.

The analyst also said that he doesn't believe that Dow "would maintain its multiple premium versus other North American petrochemical companies were the possibility of a recession meaningful."

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"The risk to the Dow share price is, for this reason, larger than that of the price risk of the other petrochemical companies as Dow could well lose the dividend premium it receives currently," he said.

On April 2, Dow Inc. replaced DowDuPontundefined  in the Dow Jones Industrial Average before the start of trading as a result of DowDupont breaking into three companies: Dow, DuPont and Corteva Agriscience. DowDuPont was formed in 2017 when chemical giants Dow Chemical and DuPont merged.

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