On Thursday, CFRA upgraded Clariant AG (SIX:CLN:SW) (OTC: CLZNY) from a Sell to a Buy rating, with a revised stock price target of CHF15.00, increased from the previous CHF10.00. This adjustment reflects a 2024 price-to-earnings (P/E) multiple of 18.8x, which aligns with the company's historical averages.
Clariant experienced a 6% organic decline in Q4 2024 sales, as lower pricing was somewhat offset by stabilized volumes due to customers restocking after low inventory levels in 2023. Despite the sales dip, Clariant's Q1 2024 EBITDA excluding exceptional items rose by 4% year-over-year in CHF terms, reaching CHF173 million. This increase was attributed to growth in volume and margin.
The company's adjusted EBITDA margin saw a significant lift of 280 basis points, arriving at 18.1%. This improvement was driven by decreased costs for raw materials and energy. Specifically, the Care Chemicals business unit reported a 300 basis point rise in EBITDA margin, while the Adsorbents & Additives business unit maintained a steady margin.
Looking forward, Clariant anticipates its EBITDA margin for 2024 to be around 15%, with prospects of an increase to between 17% and 18% in 2025. The upgrade to a Buy rating comes as the firm recognizes Clariant's capacity to deliver stronger results, moving past previous challenges.
CFRA's earnings per share (EPS) estimates for Clariant have been adjusted to CHF0.83 for 2024, up from CHF0.80, and to CHF1.10 for 2025, increased from CHF1.00. This positive outlook is based on the company's recent performance and expected improvements in the coming year.
InvestingPro Insights
The recent upgrade of Clariant AG by CFRA to a Buy rating is complemented by some interesting metrics and InvestingPro Tips that may provide investors with a broader perspective. According to real-time data, Clariant AG has a market capitalization of $4.96 billion and is trading at an adjusted P/E ratio of 15.01, which suggests a more attractive valuation compared to the industry average.
The company also stands out for its dividend policy, having maintained dividend payments for 12 consecutive years, which could appeal to income-focused investors.
From the perspective of stock performance, InvestingPro Tips highlight that Clariant has seen a strong return over the last three months, with a price total return of 16.01%. This aligns with CFRA's optimistic outlook and may indicate a positive trend for the stock. Moreover, the company's low price volatility could be a reassuring factor for investors looking for stability.
For those interested in further insights and tips, InvestingPro offers additional analysis, including predictions on profitability and earnings growth. Readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, which includes access to more comprehensive data and tips to inform investment decisions.
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