On Thursday, Piper Sandler adjusted its stance on Celanese Corporation (NYSE:NYSE:CE) stock, moving from a previously bullish Overweight rating to a Neutral position. The firm also revised its price target downward to $150 from the former target of $180. The revision follows the release of the company's second quarter 2024 earnings and updated guidance, along with insights gathered from recent channel checks.
According to the firm, the downgrade is primarily due to persistent challenges in China and the European Union, which are significant markets for Celanese. The company is also experiencing slower than expected electric vehicle (EV) build rates, particularly in the EU and the United States. These factors have led Piper Sandler to lower its earnings forecasts for Celanese for the years 2024 and 2025, with the 2025 projections falling below the current consensus.
The new price target of $150 is based on a slightly reduced multiple of 10.1 times the expected 2025 enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA), down from the previous multiple of 10.3 times. The firm cites the earnings reduction and the lowered price target as the reasons for the adjustment in the valuation multiple.
In light of these updates, Piper Sandler has provided a more conservative outlook on Celanese's stock, suggesting investors recalibrate their expectations for the company's performance in the coming years. The firm's revised analysis reflects a cautious view of the company's near-term growth prospects amid the identified headwinds.
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