Irving, Texas-based Celanese Corporation (CE) is a global hybrid chemical company. The company produces and sells high-performance engineered polymers and other chemicals and specialty materials. With a market cap of $8.2 billion, Celanese operates through Engineered Materials and Acetyl Chain segments.
Celanese had substantially lagged behind the broader market over the past year. CE stock prices have plummeted 51.9% on a YTD basis and 43.3% over the past year, significantly underperforming the S&P 500 Index’s ($SPX) surge of 25.2% in 2024 and 31% over the past year.
Narrowing the focus, Celanese has also underperformed the Materials Select Sector SPDR Fund’s (XLB) 10% gains on a YTD basis and 16.5% returns over the past year.
Celanese stock prices plummeted 26.3% after the release of its disappointing Q3 earnings on Nov. 4. Additionally, CE stock has dropped over 43.1% in the past month alone and reached a 52-week low of $71.38 on Nov. 20. Due to the weaker demand from automotive and industrial sectors the company reported a 2.8% year over year drop in net sales to $2.6 billion which fell short of Wall Street’s topline expectations. Celanese’s adjusted EPS of $2.44 also missed analysts’ estimates by a staggering 14.1%. Moreover, the company expects Q4 demand conditions to worsen and adjusted EPS for the quarter to drop to $1.25.
Celanese has been facing problems related to its capital structure. Although the company reduced its long-term debt compared to the year-ago quarter, its capital structure still needs optimization as its financial leverage has remained at elevated levels post the acquisition of Mobility and Materials. The company intends to reduce its quarterly dividend by approximately 95% beginning from Q1 2025 to reduce financial leverage which unsettled investor confidence.
For the current fiscal year, ending in December, analysts expect CE to report a 2.8% decline in adjusted EPS to $8.67. The company has a disappointing earnings surprise history. It surpassed analysts' earnings estimates once over the past four quarters while missing on three other occasions.
CE stock has a consensus “Hold” rating overall. Among the 17 analysts covering the stock, two recommend “Strong Buy,” one advises “Moderate Buy,” 10 suggest “Hold,” one advocates “Moderate Sell,” and three have a “Strong Sell” rating.
The configuration is bearish compared to three months ago when 17 analysts had a consensus “Moderate Buy” rating overall. Among these five analysts recommended a “Strong Buy” rating.
On Nov. 11, BMO Capital analyst John McNulty downgraded CE to a “Sell” rating while slashing the price target to $76, indicating a small 1.7% upside potential from current price levels.
CE’s mean price target of $108.06 represents a 44.7% premium to current price levels. Meanwhile, the Street-high target of $170 suggests an ambitious potential upside of 127.6%.
