Mizuho updated its valuation framework for Celanese Corp. by raising the target price to $55 from $45 while keeping a Neutral recommendation on the chemical maker's shares. The revised target sits close to the company's prevailing market price of $55.74, though a Fair Value assessment indicates the shares may be slightly overvalued relative to that benchmark.
The new target is derived from roughly an 8.6 times price-to-earnings multiple applied to next-twelve-months-plus-one earnings of $6.40, covering the period through December 2027. That multiple translates to a relative valuation of 0.40 versus the S&P Materials Index, compared with a five-year median relative multiple of 0.52.
Celanese provided guidance for the March quarter with an adjusted earnings per share midpoint of $0.78. That guidance sits below Mizuho's prior estimate of $1.14 and also trails the Bloomberg consensus of $0.89. For the December quarter, Celanese reported adjusted EBIT of $251 million, undershooting Mizuho's $278 million estimate and the $272 million consensus. Adjusted earnings per share for the same quarter came in at $0.67, below the $0.92 Mizuho projection and the $0.91 market consensus.
Over the past twelve months the company recorded a diluted loss per share of $28.04, though analyst projections compiled by InvestingPro point to a return to profitability with an EPS forecast of $4.25 for the coming year.
On an operating basis, Celanese reported EBITDA of $435 million for the quarter, a 16% decline sequentially driven by a 7% reduction in volume. Management commentary highlighted softness in the Acetyls segment, noting weaker demand from coatings ingredient suppliers, including Dow and Ashland. The specialty plastics business also showed weakness, and commentary around cigarette tow described de-stocking, which mirrors earlier reports from peers.
The company identified a $10 million unfavorable impact in "Other Activities" attributable to timing of expenses. Mizuho said the higher multiple applied to cyclically lower earnings reflects its approach to valuing the business during the current earnings cycle.
Celanese's fourth-quarter financials also missed analyst expectations on multiple fronts. Adjusted EPS of $0.67 fell short of the projected $0.91, and quarterly revenue of $2.2 billion missed the consensus estimate of $2.25 billion. Revenue declined 6.5% year-over-year from $2.36 billion in the comparable quarter. Operating profit for the fourth quarter was reported at $93 million, alongside the $251 million adjusted EBIT figure.
Management attributed the weaker results in part to larger-than-expected year-end destocking and increased competition within acetate tow markets, which contributed to the 7% volume decline and a 2% reduction in average selling prices. These developments influenced investor reaction following the earnings release.
Summary analysis
Mizuho's adjustment to Celanese's price target rests on a modest multiple applied to forward earnings and reflects an intent to price the company near current market levels despite recent operational softness. The company's latest quarter revealed pressures on volumes and pricing across multiple product lines, and one-time timing items further weighed on results. Analysts' aggregate forecasts indicate a potential rebound in profitability, but near-term guidance and sequential operating metrics remain a constraint on sentiment.