On Wednesday, BMO Capital Markets adjusted its outlook on Celanese Corporation (NYSE:CE), a global chemical and specialty materials company with a market capitalization of $5.87 billion, by reducing its price target from $73.00 to $46.00. Despite the adjustment, the firm maintained its Underperform rating on the stock. According to InvestingPro analysis, the stock appears undervalued at its current price of $53.79.
The decision to lower the price target comes amid growing concerns about the company’s near-term prospects. BMO Capital’s analysis points to "heightened risk to the CE story," citing a combination of macroeconomic headwinds and increasing excess capacity within Celanese’s platforms as primary factors for the revised target. The company’s challenges are reflected in its financial performance, with revenue of $10.28 billion and negative earnings in the last twelve months.
Celanese has been actively attempting to navigate through these challenges. The company’s management and board have implemented several strategic measures, including appointing new executive management for its Engineered Materials segment and adding Scott Sutton to the Board of Directors. These actions are part of a broader effort to mitigate the impact of the current market conditions on the company’s performance. InvestingPro data shows the stock is trading near its 52-week low, with a significant 45.8% decline over the past six months. Get access to 8 more exclusive InvestingPro Tips and comprehensive analysis with an InvestingPro subscription.
Despite these initiatives, BMO Capital remains cautious about Celanese’s potential for growth. The analyst from BMO Capital expressed concerns about the significant upcoming capacity in the acetyls market, which is expected to limit the upside for the company in the forthcoming years.
The revised price target of $46.00 reflects a substantial decrease from the previous target of $73.00. This new valuation is based on the analyst’s assessment of the risks that equity investors may face with Celanese in the short term. The Underperform rating suggests that BMO Capital anticipates that Celanese’s stock may not perform as well as the overall market or its industry peers in the near future.
In other recent news, Celanese Corporation reported its Q1 2025 earnings, showing an earnings per share (EPS) of $1.45, which exceeded the forecasted $1.25. However, revenue did not meet expectations, coming in at $2.37 billion, slightly below the anticipated $2.39 billion. Despite the positive earnings surprise, Jefferies revised its price target for Celanese from $70.00 to $55.00, maintaining a Hold rating on the stock. Analyst Laurence Alexander from Jefferies cited ongoing challenges in the automotive supply chain as a reason for lowering future EPS estimates.
Celanese is focusing on cash generation and has implemented $75 million in cost-saving actions, while also reducing its capital expenditure plan by approximately $100 million. The company is prioritizing high-growth segments, such as electric vehicles and medical devices, as part of its strategic initiatives. CEO Scott Richardson emphasized the importance of cash generation and shareholder value creation in his recent statements. Additionally, Celanese is exploring potential divestitures to reduce leverage and improve financial stability. These developments reflect the company’s ongoing efforts to navigate a challenging economic environment and adjust to market conditions.
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