Our $70 target price is based on enterprise value/forward EBITDA.
We apply an ~7.75x EV/EBITDA multiple to our 2026E EBITDA of roughly ~$1.7bn (subtracting net debt of ~$4.7bn) for a valuation of $70. Over the past 5 years, EMN's forward EV/EBITDA multiple has ranged 5x-10x, with an average just under 8x. We believe target multiples just below historical averages are appropriate due to current pressures on cash flow from weaker earnings and potential structural challenges, partially offset by cyclical multiple logic and potential upside from circularity projects in out-years.

We see the following risks that could prevent the stock from achieving our target price:

The company's cyclical portfolio would be materially impacted by a global economic slowdown. This includes product lines across coatings, specialty plastics, performance films, and advanced interlayers.


EMN may be negatively impacted by a change in the price of natural gas and associated liquids (ethane and propane). Furthermore, if the propylene-to-propane spread converged, this would negatively impact Additives & Functional Products and Chemical Intermediates.


The company has ~15% or greater sales exposure to transportation (coatings,resins and interlayers), building & construction and durables end markets. A slowdown in these end markets and destocking would negatively impact results.


If the impact on the company from the above factors proves to be greater/less than we anticipate, the stock will likely underperform/outperform our target price.