This Stock Plummeted Yesterday. Deutsche Bank Analysts Say It's Time to Buy

Key Takeaways

• Deutsche Bank upgraded Celanese stock to "buy," saying yesterday's big selloff was overdone.
• The bank's analysts called the chemical supplier's problems "painful but transitory."
• The analysts called Celanese a "high-quality" company. Their price target calls for appreciation, but is below the Street's consensus.

Shares of Celanese (CE) dropped 26% yesterday. At least one Wall Street analysts says it's time to get back on board.

The chemical supplier's shares, which plummeted yesterday after a disappointing earnings report, were recently about 1% higher to near $92 as broader markets rose. Analysts at Deutsche Bank upgraded the stock after its drop, arguing that the move was “overdone.”

The bank raised its rating to “buy” from “hold,” lowering its price target from $135 to $110. Wall Street's consensus target is around $138, according to Visible Alpha.

Analysts David Begleiter and David Huang wrote in a note to Deutsche Bank clients that Celanese’s troubles were “painful, but transitory.” They said that it wasn’t a surprise the company missed estimates and gave weak guidance, because all of the firms in the chemicals industry have faced soft demand.

The analysts noted that the company's plan to slow production is a temporary setback, and its cut in its dividend “should have been done 2 years ago.” The company has ample cash flow and “significant operating leverage to a recovery," they wrote, concluding that Celanese is “a high-quality company" and "a high-value, high-growth and high-margin engineered materials business.”

Shares of Celanese remain down about 40% year-to-date.

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