On Tuesday, BofA Securities analyst upgraded shares of Eastman Chemical (NYSE:EMN) from Neutral to Buy.
The modification follows an analysis of the company's earnings performance in 2024, which, despite a challenging year for commodity chemical companies, was deemed solid by the analyst. The firm adjusted the price target to $109.00 from the previous $115.00.
Eastman Chemical's stock saw a 5% increase over the year despite a 18% decline in the fourth quarter, a drop the analysts described as overdone, taking into account the risks that had emerged from factors such as elections and feedstock costs.
The upgrade to Buy reflects a belief that the current valuation of Eastman Chemical is once again attractive, with the firm trading at 7.5 times enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) and 9.8 times price to earnings (P/E) based on BofA Securities' 2025 estimates.
The analysts emphasized the potential for revenue and earnings growth over the next few years, driven by volume growth that outpaces the company's end-markets and by methanolysis, a chemical recycling process.
The report also highlighted Eastman Chemical's financial position, noting the company's capacity to generate over $250 million per year in free cash flow after dividends. This financial flexibility is seen as a positive factor, providing the company with the means to pursue mergers and acquisitions (M&A) and share buybacks, which could further enhance shareholder value.
Despite the reduction in the price target from $115.00 to $109.00, the upgrade to a Buy rating suggests a positive outlook on Eastman Chemical's stock by BofA Securities.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.