Celanese's Mixed Q1 Performance: An In-Depth Look Through Analysts' Lens

Celanese Corporation CE reported mixed first-quarter FY23, with EPS of $2.01, above the consensus of $1.64.
Q1 Sales were $2.85 billion (+22% YoY), missing the consensus of $2.86 billion.
The Chairman and CEO, Lori Ryerkerk, commented, "Our team delivered a clear upward inflection in our combined Engineered Materials and Acetyl Chain earnings to start 2023 with sequential increases in operating profit and operating EBITDA of 70 percent and 34 percent, respectively."
"We expect that sequential earnings growth in our businesses, largely due to controllable actions, will deliver second quarter adjusted earnings per share of approximately $2.50, inclusive of approximately $0.30 per share of M&M transaction amortization," added Ryerkerk.
BMO Capital analyst John McNulty maintained the Outperform rating on Celanese and lowered the price target to $133 (upside of 31%) from $146.
McNulty notes that the CE management provided a balanced outlook for business, where the focus remains on FCF/deleveraging. The macro is improving slower than expected, but it is improving.
The analyst expects CE to outperform the broader space as it leverages its global scale/flexibility to capture volumes, work around regional issues, and capture cross-sell opportunities.
McNulty stated that CE has significant flexibility and management strength to drive additional shareholder value through M&A and buybacks.
Mizuho analyst Kieran De Brun maintained the Neutral rating on CE and lowered the price target to $112 (upside of 10%) from $113.
The analyst appreciates the actions taken by CE to strengthen FCF and the implications for debt paydown in FY23 but sees the global economic backdrop remains challenging, with a cautious view around electronics, auto, and construction demand in 2H.
Wells Fargo analyst Michael Sison maintained the Overweight rating on CE and lowered the price target to $124 (upside 22%) from $140.
Sison believes M&M will improve, offering strong earnings upside and eventually driving consolidated EBITDA of ~$4 billion.
Barclays analyst Michael Leithead maintained the Overweight rating on CE and lowered the price target to $146 (upside 43%) from $150.
Price Action: CE shares are trading higher by 0.20% at $101.43 on the last check Friday.

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