On Thursday, Stifel, a financial services firm, increased its price target for shares of Celanese Corporation (NYSE: NYSE:CE), a global chemical and specialty materials company, to $146 from $138, while maintaining a Hold rating on the stock. The adjustment reflects a more optimistic outlook for the company's recovery in the second half of 2024, despite a softer second-quarter guidance.
Celanese has reported ongoing progress in restructuring its Engineered Materials (EM) segment, although the anticipated margin improvements have been slower and weaker than initially expected. Moreover, the company has experienced weaker-than-anticipated seasonal order patterns in its Acetyl Chain (AC) segment, which is anticipated to impact the second quarter of 2024.
Despite these challenges, Stifel remains relatively confident in Celanese's performance improvement in the latter half of the year. This confidence is supported by the company's consistent full-year guidance. The firm's analysts believe that cost reduction and product mix initiatives will underpin the expected improvement.
Still, Stifel also notes that there are limits to the potential valuation upside for Celanese's stock. While the free cash flow yield is a positive factor, the analysts suggest that further balance sheet deleveraging is necessary to fully realize the value upside of the free cash flow yield.
Consequently, Stifel has adjusted its multiple to 9.5 times to arrive at the new $146 target price. This represents a modest discount to the industry's midcycle median, factoring in leverage levels and the necessity for Celanese to rebuild confidence in its EM segment.
InvestingPro Insights
As Celanese Corporation (NYSE: CE) undergoes strategic restructuring and faces market headwinds, it is noteworthy to consider the company's financial health and stock performance through real-time data from InvestingPro. With a solid market capitalization of $18.01B and a P/E ratio of 8.93, Celanese appears to be trading at a value that is compelling when compared to historical earnings.
Furthermore, the company has demonstrated a robust revenue growth of 13.1% over the last twelve months as of Q1 2023, which may signal underlying business strength despite near-term challenges.
InvestingPro Tips highlight the company's commitment to shareholder returns, with a high shareholder yield and a commendable track record of raising its dividend for 14 consecutive years. Additionally, the stock's low price volatility and the fact that it is trading near a 52-week high may appeal to investors seeking stability and growth potential.
For those interested in a deeper analysis, there are 9 additional InvestingPro Tips available for Celanese, which can be accessed by visiting https://www.investing.com/pro/CE. To enrich your investment strategy, take advantage of the special offer and use the coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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