Citigroup Downgrades Trinseo To Neutral On Stronger Dollar, Chain Destocking

P.J. Juvekar of Citigroup on Monday downgraded shares of

to Neutral from Buy with a price target lowered to $17 from a previous $19 following commentary from

that it expects lower earnings due to a strong dollar and destocking in the chain. “While Celanese doesn't compete with Trinseo, Celanese's comments are intrusive in our view,” Juvekar wrote. “Trinseo may benefit from lower raw materials in the near-term, but its product pricing is likely to follow with a one to two quarter lag as customers reduce inventory levels.” According to Juvekar, Trinseo derives 60 percent of its sales from Europe, which is the highest exposure to the continent within the analyst's universe, followed by

and Celanese. Juvekar also notes that Celanese's management noted destocking activity was prevalent in Europe and Asia. The analyst sees Trinseo's pricing activity will likely be pressured due to the pass-through of lower raw material costs. Juvekar notes that management provided guidance that its EBITDA is impacted by $1 million per year for every 1c change in the year. As such, the analyst is lowering his 2015 earnings per share estimate by 14 percent to $0.22 and EBITDA estimate by four percent to $13 million.