The firm's analysts expect a downshift in global demand and an increasingly uncertain outlook to hurt earnings.
The Midland, Mich., company's shares fell 1.9% to $43.23 in trading on Friday after B of A Merrill Lynch cut its rating to underperform from neutral.
The analysts cited near-term "sluggish demand" for the company's chemical-based offerings, in particular polyethylene, which is used to make plastic grocery bags and many other products.
"We do continue to hold a favorable relative view on the long-term supply for caustic soda over polyethylene, but see these commodities driven in the near-term by sluggish demand," the firm said in a note to clients.
The note included estimates cuts and lowered valuation multiples for all the bank's commodity-exposed research coverage -- which includes Dow as well as LyondellBasell (LYB) - Get Report , Olin (OLN) - Get Report and Westlake Chemical (WLK) - Get Report -- to 6 times estimated 2020 earnings before income, taxes, depreciation and amortization from 7 times.
B of A Merrill Lynch issued a similar downgrade on Dow on July 26, to neutral from buy, saying the company's chemicals businesses are "stuck in neutral," given prospects for demand and global production.
That downgrade came a day after the company reported second-quarter earnings fell from a year earlier on lower revenue, stemming from chemical-price declines and reduced sales.