On Tuesday, Clariant AG (SIX:CLN:SW) (OTC: CLZNY) received an updated price target from Citi, with the firm raising the target to CHF17.00 from CHF16.50, while the Buy rating on the stock was maintained. The adjustment comes amidst expectations of the company's performance exceeding the consensus forecasts for the second quarter (Q2) and the full fiscal year.
Citi anticipates a robust showing for Clariant's Care Chemicals division, driven by restocking in consumer end markets, which is expected to contribute to growth. The firm projects an adjusted EBITDA of CHF107 million for the division in Q2, although there is caution regarding the potential impact from post-close inventory adjustments following the Lucas Meyer acquisition.
The Catalysts division is also expected to demonstrate strong sequential EBITDA progression, with sales increasing from a trough, benefiting from high operating leverage, and an estimated adjusted EBITDA of CHF42 million for Q2. The Adsorbents & Additives division is predicted to maintain a stable quarter-over-quarter progression with an estimated adjusted EBITDA of CHF44 million for Q2.
Overall, Citi has raised its Q2 adjusted EBITDA forecast for the group by 2.5% to CHF175 million, which is 5% above the consensus. For the full year 2024, Citi's forecast stands at CHF755 million, marking a 4% increase over the consensus.
The firm also noted the potential for Clariant's management to revise its margin guidance upwards. While the current margin guidance stands at approximately 16%, excluding all impacts from Sunliquid, Citi forecasts a margin of 17.5%. This optimistic outlook has contributed to the increase in the price target to CHF17.00 per share while reiterating a Buy recommendation for investors.
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