Citi upgraded Celanese (NYSE: CE) from Neutral to Buy.

Analyst P.J. Juvekar comments "CEO Mark Rohr has delivered higher earnings each year since taking the helm four years ago despite several road bumps such as the expiration of a favorable methanol contract plus collapsing oil prices in 2015 and declining acetate tow profits in 2016. While lower acetate tow profits (~30% of overall EBITDA) concerned us last year, we think it’s priced into the shares. We upgrade CE to Buy as the company enters into a favorable setup in 2017 driven by the follow factors: 1) Strong underlying growth in Advanced Engineered Materials driven by product launches and niche M&A; 2) Raw material inflation is positive for pricing power in the acetyls chain; and 3) Robust free cash flow generation of $900-1,000mm per year (~8% yield) for M&A and stock buybacks ($500mm in 2017). We believe M&A will be critical in getting to management's 2018 EPS target of $8+."

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Shares of Celanese closed at $85.99 yesterday.