Wells Fargo analyst Michael Sison maintained a Hold rating on Eastman Chemical (EMN – Research Report) yesterday and set a price target of $100.00.
Michael Sison has given his Hold rating due to a combination of factors surrounding Eastman Chemical’s current market valuation and future earnings potential. The analyst acknowledges that while Eastman Chemical is anticipated to achieve double-digit EPS growth in 2024, the stock’s valuation already reflects much of this growth, trading at an estimated 9.0x EV/EBITDA for 2024. There is also a need for greater confidence in the company’s ability to reach its EBITDA potential of approximately $2.4 billion, which could potentially lead to a reevaluation of the stock’s multiple.
Sison notes the positive trend in Eastman Chemical’s segment-wise EBIT guidance as an indicator of stable demand, with improvements in capacity utilization acting as a tailwind. Incremental improvements in EBIT across various segments signal that the company is on a stable footing. However, mixed progress in the company’s circular platform, notably the delays in the France project, and the need for the company to reach a normalized EBITDA run rate to achieve its potential, contribute to the Hold rating. Sison sets a 12-month price target based on a 9.0x multiple of the 2024 estimated EV/EBITDA, recognizing that the current risk/reward profile of the stock is balanced.
In another report released on April 25, Mizuho Securities also maintained a Hold rating on the stock with a $102.00 price target.
Based on the recent corporate insider activity of 27 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of EMN in relation to earlier this year.
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Eastman Chemical (EMN) Company Description:
Eastman Chemical Co. engages in the provision of specialty chemicals. It operates through the following segments: Additives and Functional Products, Advanced Materials, Chemical Intermediates and Fibers. The Additives and Functional Products segment includes chemicals for products in the transportation, consumables, building and construction, animal nutrition, crop protection, energy, personal and home care, and other markets. The Advanced Materials segment produces and markets its polymers, films, and plastics with differentiated performance properties for value-added end uses in transportation, consumables, building and construction, durable goods, and health and wellness markets. The Chemical Intermediates segment consists of large scale and vertical integration from the cellulose and acetyl, olefins, and alkylamines streams to support operating segments with advantaged cost positions. The Fiber segment offers cellulose acetate tow for use in filtration media, primarily cigarette filters. The company was founded by George Eastman in 1920 and is headquartered in Kingsport, TN.
