On Monday, Baird has adjusted its price target on shares of Celanese Corporation (NYSE:CE), a global chemical and specialty materials company, to $150 from the previous $180. The firm has maintained its Outperform rating on the stock.
The revision reflects Baird's analysis of Celanese's ability to maintain strong earnings and free cash flow conversion despite a challenging operating environment marked by both macroeconomic and industry-specific hurdles. The firm believes that Celanese's consistent execution agility is a critical factor supporting its positive outlook on the company.
The lowered price target is based on approximately 12 times Baird's 2025 earnings per share (EPS) estimate of $12.75. This forward-looking EPS estimate is a key component of the valuation model used by Baird to set the new price target for Celanese.
Celanese has been navigating an operating landscape that is filled with uncertainties, which include fluctuations in the macroeconomic environment. The U.S. macroeconomic conditions, in particular, are cited as the most significant variable that could affect the company's future earnings outcomes.
The Outperform rating indicates that Baird continues to view Celanese's stock favorably and expects it to perform better than the average total return of the stocks covered by the firm over the next 12 months. Despite the reduction in the price target, the firm's stance suggests confidence in Celanese's strategic positioning and financial performance going forward.
In other recent news, Celanese Corporation saw an upgrade in its stock rating from JPMorgan, moving from Underweight to Neutral, following an in-depth examination of the company's second-quarter earnings.
Despite facing supply challenges and reduced demand, the company's performance issues were not as severe as initially perceived. Celanese has largely resolved its supply problems and anticipates improved operating rates in the Acetyl Chain during the third quarter of 2024.
JPMorgan has revised its earnings per share (EPS) estimate for Celanese for the year 2024, lowering it from $11.30 to $10.55, and for 2025 from $13.60 to $13.35, citing weaker demand conditions. Despite these adjustments, Celanese maintains a steady outlook, expecting moderate growth in volumes and margins in the upcoming quarter, with particular growth in the automotive sector, especially in China.
InvestingPro Insights
In light of Baird's recent price target adjustment for Celanese Corporation, current InvestingPro data and tips offer additional context for investors considering the stock. With a market capitalization of $14.37 billion, Celanese trades at a P/E ratio of 7.45, indicating a potentially undervalued stock relative to near-term earnings growth, as reflected by a low PEG ratio of 0.14. This aligns with Baird's positive outlook, suggesting that the stock could offer value at its current price.
InvestingPro Tips highlight Celanese's robust shareholder returns, including a high shareholder yield and a commendable track record of raising its dividend for 14 consecutive years. Moreover, the company has maintained dividend payments for 20 consecutive years, underscoring its commitment to shareholder value. Despite some analysts revising earnings downwards for the upcoming period, the company is still predicted to be profitable this year, with a strong free cash flow yield implied by its valuation.
For investors seeking further insights, there are additional InvestingPro Tips available, which can offer a deeper dive into Celanese's financial health and future prospects. Interested readers can explore these tips by visiting the dedicated InvestingPro page for Celanese: https://www.investing.com/pro/CE.
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