RBC Capital Cuts Celanese Price Target By 42% - Read Why

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  • RBC Capital analyst Arun Viswanathan downgraded Celanese Corp CE to Sector Perform from Outperform and lowered the price target to $116 (8% upside) from $200.
  • The analyst downgraded the ratings reflecting anticipated peak acetic/VAM prices, higher natural gas costs, and higher expected leverage.
  • Viswanathan mentions that according to IHS, North America Acetic and VAM contract prices are expected to peak in 2Q22-3Q22 at ~$1000/mt and ~$1600/mt, respectively, and decline roughly 15-20% into 2023. As a result, AC chain earnings at CE will likely wane in 2H22 and into 2023.
  • The analyst noted that higher energy costs, particularly natural gas in Europe and in CE's EM segment, will likely continue to put pressure on margins into 2H22 and 2023.
  • Viswanathan believes the stock is likely rangebound throughout the year as the market awaits stabilization and the M&M deal closing.
  • B of A Securities analyst Matthew DeYoe maintained Celanese with a Neutral rating and lowered the price target from $171 to $144 (34% upside).
  • Price Action: CE shares are trading lower by 3.77% at $107.45 on the last check Wednesday.
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