Celanese: Leveraged Play on an Approaching Chemical Cycle Recovery with Compelling Upside Risk/Reward

In a report released today, Laurence Alexander from Jefferies upgraded Celanese to a Buy, with a price target of $86.00.

Laurence Alexander has given his Buy rating due to a combination of factors tied to both the macro cycle and company-specific leverage to an eventual recovery. He believes the current weak-demand narrative is nearing an inflection point as policy stimulus in the US and Europe, along with tighter industry discipline on new capacity, sets the stage for better conditions in commodity chemicals. With indicators like global credit impulse improving and the potential for easing US bank lending standards, he expects more cyclical, highly levered chemical names such as Celanese to outperform as short-cycle economic data and manufacturing activity turn up. He also anticipates that earnings estimates will bottom in the first half of 2026 and then begin to rise as macro indicators improve.

Alexander’s valuation framework shows an attractive risk/reward profile for Celanese, with shares offering more than three times upside relative to downside when comparing mid-cycle to trough scenarios. He estimates mid-cycle EBITDA of roughly $2.7–$3.0 billion and peak EBITDA of $4.3–$5.0 billion, implying substantial upside to the current share price on both mid-cycle and peak multiples, including meaningful excess free cash flow. At the same time, he forecasts solid deleveraging, with net debt to EBITDA falling from about 5.7x to around 4.0x by the end of 2027, supported by free cash flow generation of more than $700 million annually. This expected balance sheet improvement, combined with rising returns toward mid-cycle levels, is projected to drive multiple expansion and underpins his decision to upgrade Celanese to a Buy rating.