In a report released today, John McNulty from BMO Capital maintained a Hold rating on Celanese, with a price target of $55.00.
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John McNulty has given his Hold rating due to a combination of factors impacting Celanese’s performance. Despite the company exceeding expectations in the second quarter, driven by strong performance in emerging markets, there are significant challenges ahead. The profitability of the acetyls segment, particularly in China, is under pressure due to recent price troughs, and management’s inventory reduction strategies are expected to lead to earnings that fall short of market expectations.
Looking forward, Celanese’s management anticipates a decline in demand across key markets in the latter half of the year, notably in Europe and China. This has resulted in a lowered earnings guidance for the third quarter, which is significantly below consensus estimates. Although there are some positive developments, such as asset sales that could strengthen the balance sheet, the overall outlook remains cautious. As a result, McNulty maintains a Hold rating, reflecting the balance between potential risks and opportunities.
In another report released today, UBS also maintained a Hold rating on the stock with a $49.00 price target.