Bullish indicating open at $55-$60, IPO prices at $37
On Friday, Citi analysts upgraded Eastman Chemical (NYSE:EMN) stock from Neutral to Buy, albeit with a reduced price target of $101.00, down from the previous $105.00. The upgrade comes as the stock trades near its 52-week low of $79.81, with InvestingPro data showing an 8.12% decline in the past week. The firm cited a potentially more stable growth profile for the company, despite uncertainties in consumer and industrial sectors. The analysts pointed to Eastman Chemical’s cost reduction actions, which are expected to save about $50 million, and improved operating performance, particularly from its methanolysis process. The company’s financial health appears solid, with InvestingPro reporting a "GOOD" overall financial health score and maintaining dividend payments for 32 consecutive years.
Eastman Chemical’s specialty businesses, especially Additives & Functional Products (A&FP), are expected to benefit from strong end markets such as agriculture and medical. The analysts believe that even the lower end of the projected $75-100 million growth from methanolysis would be favorable against the current macroeconomic backdrop.
The upgrade reflects confidence in Eastman Chemical’s ability to achieve modest earnings growth. The company’s strategic initiatives, including cost-cutting measures and operational improvements, are anticipated to contribute to its financial performance.
Eastman Chemical’s focus on specialty segments is seen as a key driver for its stable growth trajectory. The A&FP division, with its robust end markets, is particularly highlighted as a strong contributor to the company’s future success.
Despite the positive outlook on growth and operational performance, Citi’s price target adjustment from $105.00 to $101.00 suggests a more cautious valuation of Eastman Chemical’s stock. According to InvestingPro analysis, the stock appears undervalued at current levels, with a P/E ratio of 10.39 and a healthy 4.15% dividend yield. The new target reflects the balance between the company’s growth prospects and the broader economic uncertainties that may impact its performance. InvestingPro subscribers have access to 10 additional exclusive tips and comprehensive valuation metrics for EMN, along with detailed Pro Research Reports available for over 1,400 US stocks.
In other recent news, Eastman Chemical reported its fourth-quarter 2024 earnings, with an earnings per share (EPS) of $1.87, surpassing analysts’ expectations of $1.61. Despite a slight revenue miss, with actual figures at $2.25 billion against a forecast of $2.28 billion, the company’s performance was well-received by investors. Eastman Chemical also announced the issuance of $250 million in new notes, intended for general corporate purposes, including working capital and debt repayment. Mizuho (NYSE:MFG) Securities upgraded Eastman Chemical’s stock rating from Neutral to Outperform, citing the company’s strategic advantages and growth in forward earnings. KeyBanc Capital Markets raised Eastman Chemical’s stock price target from $121.00 to $128.00, maintaining an Overweight rating, and highlighted the company’s robust performance in the fourth quarter. The firm’s analysts anticipate a 6% increase in EPS for 2025, supported by internal initiatives and volume stabilization in key markets. Additionally, Eastman Chemical is making progress in sustainable materials, particularly in circular plastics, moving from losses to modest profitability in this segment. These developments reflect a positive outlook for Eastman Chemical amidst a challenging environment in the basic chemicals industry.
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