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On Monday, Piper Sandler adjusted its outlook on Celanese Corporation (NYSE:CE), a global chemical and specialty materials company, by reducing its price target from $50.00 to $48.00. The firm maintained its Underweight rating on the stock, indicating a cautious perspective on its investment potential. The stock, currently trading at $39.63, has fallen 74.4% over the past year and is trading near its 52-week low. According to InvestingPro analysis, Celanese appears undervalued based on its Fair Value metrics, with 12 key insights available to subscribers.
The revision of the price target by Piper Sandler reflects concerns over the impact of tariffs on Celanese's financial performance. The analyst, representing Piper Sandler, expressed that the tariffs are expected to negatively affect the company in two significant ways. Firstly, there is an anticipated decline in revenue and earnings due to slower growth, which is attributed to the current tariff environment. Secondly, the analyst anticipates that the lower earnings will hinder Celanese's ability to repay its debt efficiently. This concern is particularly relevant given the company's debt-to-equity ratio of 2.5 and current market capitalization of $4.43 billion.
The analyst's valuation of Celanese is based on a multiple of 8.0x on the company's projected 2026 enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA). This approach to valuation takes into account the company's future profitability and debt obligations. The current EV/EBITDA ratio stands at 8.78x. For deeper insights into Celanese's valuation metrics and comprehensive analysis, InvestingPro subscribers can access the detailed Pro Research Report, part of the platform's coverage of over 1,400 US stocks.
Additionally, the analyst pointed out that the ability of Celanese to refinance its maturing debt could be compromised due to the reduced earnings. This financial situation may present challenges for the company in the upcoming years as it navigates its debt obligations amidst the tariff-induced financial pressures.
Piper Sandler also acknowledged that there are risks associated with their outlook. A potential rapid reversal of the tariffs could positively alter the current forecast for Celanese. However, such a change in the tariff situation is seen as the primary variable that could lead to a deviation from the analyst's current expectations for the company's financial trajectory.
In other recent news, Celanese Corporation has been active with several significant developments. The company announced a price increase for various chemical products, including vinyl acetate monomer and vinyl-based emulsions, set to take effect in March 2025. This move reflects changing market conditions in the Western Hemisphere. Additionally, Celanese secured $1.8 billion through senior notes offerings, involving both USD and Euro Notes, to strengthen its financial position and support business operations.
Furthermore, Celanese amended its bylaws to designate specific courts for legal proceedings related to securities laws, aiming to streamline litigation processes. In terms of analyst activity, Evercore ISI revised its price target for Celanese to $75, maintaining an In Line rating, citing potential upside influenced by improved company visibility and reduced leverage concerns. Conversely, Piper Sandler lowered its price target to $50, maintaining an Underweight rating due to challenges in financial recovery and reduced EBITDA estimates for 2025 and 2026.
These recent developments highlight Celanese's strategic financial maneuvers and the varied perspectives of analysts regarding the company's future prospects.
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