On Friday, Citi reiterated a neutral rating with a price target of $167.00 Sierra Leone Corporation (NYSE: ) is a global chemical and specialty materials company. This reaffirmation comes after the company announced force majeure and sales controls for its two main products, acetic acid and vinyl acetate monomer (VAM).
Celanese has been facing significant challenges due to force majeure and operational failures at multiple suppliers of key raw materials that are critical to the production of acetic acid and VAM. Mark Murray, senior vice president of Celanese’s acetyl chain, said these disruptions are expected to have a negative impact of 15-20% on the company’s U.S. Gulf Coast (USGC) production in the second quarter of 2024.
Murray also noted that the financial impact in the second quarter of 2024 will come from additional costs associated with operating in higher-cost facilities, external procurement and managing logistics to mitigate customer impact. These problems are exacerbated by production impacts due to estimated production shortfalls.
While the situation poses challenges for Celanese, Citi said it could have a slightly positive impact on the company LyondellBasell Industries (NYSE: ) and Eastman Chemical Co. (NYSE: ) due to temporary supply constraints. However, the company also warned that LyondellBasell could experience similar supply disruptions in the USGC region.
In other recent news, global chemicals and specialty materials company Celanese Corp. has been grappling with supply chain disruptions resulting from force majeure and controls on sales of acetic acid and vinyl acetate monomer in the Western Hemisphere. This results in the company’s second-quarter production expected to decrease by 15% to 20%. Despite these challenges, the company maintained its fiscal 2024 guidance, with earnings per share forecast of $11-$12, and second-quarter guidance of $2.60-$3.00.
Analysts at BMO Capital Markets, RBC Capital and Baird updated their outlook on Celanese stock. BMO Capital Markets raised its price target to $158, RBC Capital raised its price target to $176, and Baird raised its price target to $180, reflecting their expectations for the company’s resilience and growth potential.
Celanese’s strategic acquisitions, such as DuPont’s (NYSE: DuPont) operations and materials businesses, along with its focus on debt reduction and strong free cash flow generation, are expected to drive long-term earnings growth and return value to shareholders. These recent developments highlight the stability of the company’s financial position despite a challenging operating environment.
Investment Professional Insights
Celanese Corporation (NYSE: CE ) exhibits a combination of stability and value that may appeal to investors looking for stable returns. With a price-to-earnings ratio of 7.99 and an adjusted price-to-earnings ratio of 9.86 for the trailing 12 months to the first quarter of 2024, the company’s price-to-earnings ratio is attractive. This is especially noteworthy given the company’s consistent history of maintaining dividend payments for 20 consecutive years. Additionally, InvestingPro Tips highlights that Celanese has raised its dividend for 14 consecutive years, underscoring its commitment to shareholder returns.
As its valuation suggests, the company’s strong free cash flow yield is another point of interest for investors. Additionally, the stock is known for its low price volatility, which can be a reassuring factor for investors who prioritize stability. For those looking to delve deeper into financial and strategic insights, InvestingPro offers a range of additional tips to consider. For example, there are 8 more tips on InvestingPro for Celanese, which can be accessed by visiting https://www.investing.com/pro/CE. Readers interested in these insights can use the coupon code PRONEWS24 Annual or biennial Pro and Pro+ subscriptions receive an additional 10% discount.
Investors should be aware that despite Celanese’s operational challenges, analysts predict the company will remain profitable this year. As of the first quarter of 2024, revenue grew by 7.11% in the past 12 months, with gross profit margins as high as 23.61%, proving the resilience of the company’s financial position. These numbers, combined with its 1.9% dividend yield, could make Celanese an attractive choice for dividend-seeking investors.
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