Celanese Drop: Gloomy Projection, Analysts Downgrades, and Lower-than-Expected Q3 Result
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Nov. 5, 2024 - Celanese (NYSE:CE), a global technology and specialty materials company for various industries, today dropped 25.5% with more than five million shares sold by the investors and traders. Celanese experienced a bleak outlook with some analysts downgrading, lower-than-expected Q3 result and grim forecast for the fourth quarter this year.
When other market-mover stocks decline less than 10%, Celanese scares out with 25% drop in price and hit its 52-week-low. Celanese supplies its products to various industries, including acetate tow that is used in cigarette filters and textile applications, acetate fibers for clothing and home furnishings, engineering polymers for industrial applications and more specialty chemicals for coatings, adhesives, and construction. Despite the wide range of its highly useful products across various industries, Celanese's CEO has expressed a bleak outlook for the fourth quarter of this year.
Lori Ryerkerk, chair and chief executive officer of Celanese commented in the last earnings call: We expect demand conditions to worsen in the fourth quarter, as automotive and industrial segments react to recent dynamics by seasonally destocking at heavier than normal levels. While we expect this destocking to be temporary and contained to the quarter, we will significantly slow our production to match this demand level and to generate cash through inventory draw. Her statement declares that Celanese sees its demand conditions worsening in Q4.
For the third quarter of 2024, the company booked $2.6 billion of sales lower than consensus sales estimates of $2.7 billion. Ryerkerk commented that they faced a severely constrained demand environment that, in some cases like auto, degraded swiftly.
With all the information mentioned, analysts from Wells Fargo and Mizuho lowered their price targets for Celanese. Wells Fargo downgraded Celanese from Overweight to Equal with a lowered price target from $165 to $115 while Mizuho has its target at $120 from initially $132 for Celanese.
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This article first appeared on GuruFocus.