On Monday, Evercore ISI maintained its In Line rating and $118.00 price target for shares of Eastman Chemical (NYSE: EMN). The firm highlighted the company's positive outlook for the second half of the year, noting that Eastman Chemical's trajectory is looking encouraging.
The analysis pointed out that the normalization of demand is likely to benefit volume growth in core segments such as Additives & Functional Products (AM) and Advanced Materials & Fibers & Plastics (AF&P). This comes despite the challenges faced by the company due to de-stocking which impacted Eastman Chemical later and more significantly than some of its peers.
Evercore ISI also focused on the strategic developments at Eastman Chemical, particularly the planned sanctioning of a new methanolysis (chemical recycling) plant in Longview, Texas. The decision on investment (FID) for this plant is anticipated to occur potentially in the third quarter of the year. The firm notes that this would lead to a year with lower capital expenditures in 2024, followed by an increase in 2025 and 2026, assuming that both the Texas and France facilities are constructed.
The firm's outlook is buoyed by the expectation of volume growth across various sectors, including automotive, construction, engineered materials, agriculture, and medical. This growth is expected to manifest in the second quarter, despite indications of slack in end-market demand. Improved volumes in Advanced Materials and Chemical Intermediates are key factors underpinning this trajectory.
Recent discussions with Investor Relations suggest that Eastman Chemical's facilities are operating at high capacity to meet anticipated customer needs, stemming from lower inventory levels at the start of the year and the first half's turnarounds.
In other recent news, Eastman Chemical Company (NYSE:EMN) has seen several significant developments. The company announced the appointment of Donald Slager to its Board of Directors, a move celebrated by Eastman's CEO and Board Chair, Mark Costa, for Slager's extensive experience and leadership in the environmental services industry. Additionally, the company reported revenue of approximately $9.2 billion for the year 2023.
In the realm of financial analysis, Eastman Chemical received upgrades from UBS and Piper Sandler, with UBS raising the company's rating from Neutral to Buy and Piper Sandler increasing the price target for the company's shares. UBS highlighted that Eastman's first-quarter earnings beat estimates by 13% and anticipates higher growth into 2025.
Meanwhile, Piper Sandler's decision was influenced by Eastman Chemical's first-quarter earnings surpassing expectations and a generally more positive outlook for the industry.
RBC Capital Markets also adjusted its outlook on Eastman Chemical shares, raising the price target on the anticipation of an improvement in Eastman Chemical's earnings for the fiscal years 2024 and 2025. The firm expects the company's volumes to recover over the coming year, leading to a robust performance for Eastman Chemical in 2025.
Finally, in its First Quarter 2024 Earnings Call, Eastman Chemical revealed delays in its France project due to regulatory uncertainty and the need to address inflation and reduce capital expenditure. Despite these challenges, the company remains committed to its circular economy model and long-term contracts. The company also expects substantial earnings recovery this year, with growth projected for 2025 and 2026.
InvestingPro Insights
Eastman Chemical (NYSE: EMN) has been navigating a complex market environment, but recent analysis from Evercore ISI paints a positive picture for the second half of the year. Complementing this outlook, InvestingPro data provides additional context that may be of interest to investors. The company's market capitalization stands at $11.7 billion, with a P/E ratio of 12.71, indicating a potentially attractive valuation in comparison to near-term earnings growth. Additionally, Eastman Chemical has demonstrated a commitment to shareholder returns, not only through a high shareholder yield but also by raising its dividend for 14 consecutive years, and maintaining dividend payments for 31 consecutive years.
Investors should note that while some analysts have revised their earnings expectations downwards for the upcoming period, the company's stock is trading near its 52-week high and is predicted to remain profitable this year. Moreover, Eastman Chemical's management has been actively buying back shares, which may signal confidence in the company's future prospects. These factors, combined with the company's low price volatility, could make EMN an interesting addition to a diversified investment portfolio.
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