’Reddit is built for this moment’ - Stock soars on crushed earnings
On Tuesday, Piper Sandler adjusted its outlook on Celanese Corporation (NYSE:CE), a global chemical and specialty materials company. Analysts at the firm set a new price target for Celanese stock at $50.00, down from the previous $77.00, while maintaining an Underweight rating. The stock, currently trading at $52.93, is hovering near its 52-week low of $50.82, with InvestingPro data showing 10 analysts having recently revised their earnings estimates downward.
The reassessment by Piper Sandler follows the release of Celanese’s fourth quarter and full-year results for 2024, as well as its guidance for the first and second quarters and selected guidance for the full year of 2025. The company’s financial health metrics from InvestingPro reveal concerning fundamentals, including a high debt-to-equity ratio of 2.5 and negative earnings per share of -$13.86 over the last twelve months. The firm’s analysts have also conducted their own channel checks and revised their macroeconomic outlook, which now anticipates a lower global and regional growth trajectory compared to their previous estimates.
The new price target and maintained Underweight rating reflect the challenges Celanese may encounter in returning to financial health. Piper Sandler has significantly reduced its EBITDA estimates for Celanese for the years 2025 and 2026. These adjustments come in light of what the firm identifies as "substantive issues" that the company will face.
The valuation is based on a multiple of 8.0 times the estimated 2026 enterprise value to EBITDA (EV/EBITDA), an increase from the prior multiple of 7.8 times. According to Piper Sandler, the increase in the multiple is a common response to lower earnings projections in a cyclical stock like Celanese.
The analyst’s statement highlighted concerns about Celanese’s earnings affecting its ability to reduce debt. "Weak Earnings Dampen Debt Reduction Efforts; We are updating our CE model to reflect the release of 4Q24 and FY24 results, 1Q25, 2Q25 and FY25 (selected) guidance, our own channel checks and revisions in our macroeconomic outlook, which is taking a decidedly lower global and regional growth trajectory than our previous estimates. Based on the new data and our own revisions we are retaining our UW rating on CE shares, significantly cutting our EBITDA estimates for 2025 and 2026 and cutting our PT to $50, to reflect the substantive issues CE will face to return the company to financial health," said the Piper Sandler analyst. Despite these challenges, InvestingPro analysis suggests the stock is currently undervalued, with additional insights available in the comprehensive Pro Research Report, which provides deep-dive analysis of over 1,400 US stocks.
In other recent news, Celanese Corporation has been the focus of several analyst updates following its recent earnings reports. Despite surpassing expectations in its fourth-quarter earnings, Celanese’s near-term outlook appears challenging, leading multiple firms to adjust their price targets and ratings. BofA Securities maintained a Buy rating but lowered its price target to $72, citing underwhelming earnings and potential improvements in EBITDA after 2025. UBS also revised its price target down to $60, maintaining a Neutral rating due to anticipated challenges in the first half of the year and reduced earnings expectations for 2025 and 2026.
RBC Capital Markets downgraded Celanese from Outperform to Sector Perform, with a new price target of $56, due to concerns over the company’s exposure to the automotive market, especially in Europe. BMO Capital Markets expressed heightened risk concerns, reducing the price target to $46 and maintaining an Underperform rating, while highlighting macroeconomic headwinds and excess capacity issues. Jefferies also lowered its price target to $55, retaining a Hold rating, and noted ongoing automotive supply chain weaknesses affecting Celanese’s 2025 earnings projections.
These developments reflect a cautious stance among analysts regarding Celanese’s financial trajectory, particularly in light of challenges in the automotive sector and broader economic conditions. Investors are closely monitoring how the company navigates these headwinds and the strategic measures it implements to address leverage and market conditions.
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