Celanese Upgrade 'Reflects Progress' As Debt Overhang Is Poised To Wane: Analyst

Shares of Celanese Corporation CE maintained a downtrend in early trading on Monday.

This is likely to be a “critical transition year” for the company, when the sizable overhang of the debt taken for the M&M transaction is reduced, according to Piper Sandler.

The Celanese Analyst: Charles Neivert upgraded the rating for Celanese from Neutral to Overweight, while raising the price target from $135 to $170.

The Celanese Thesis: “The upgrade reflects the progress on earnings and debt we see coming in 2024 and showing more strongly in 2025 (and beyond),” Neivert said in an upgrade note.

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Although Celanese’s earnings recovery and balance sheet reconstruction will take time, the economic environment and industry dynamics are becoming more positive, as a result of which the shares could “move more with the improving business cycle and be less concerned with the debt risk,” the analyst stated.

Celanese’s EBITDA may rise to just below $3 billion in 2025, “on a modest recovery in global markets, increasing contributions from transaction synergies and stronger throughput from capacity gains in 2024 which should ramp to full operation and contribution in 2025,” he added.

CE Price Action: Shares of Celanese had risen slightly by 0.01% to $149.40 at the time of publication Monday.