Eastman Chemical (EMN.N): 2H Setup Improving on Specialty Execution Despite Soft Discretionary Markets

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Eastman Chemical (EMN.N): 2H Setup Improving on Specialty Execution Despite Soft Discretionary Markets

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31 Jul 2026 18:06:03 ET │ 13 pages

Eastman Chemical (EMN.N)

2H Setup Improving on Specialty Execution Despite Soft Discretionary

Markets

CITI'S TAKE Buy

Price (31 Jul 26 16:00) US$69.95 Our takeaways from the call: 1) EMN noted stronger confidence in the 2H

Target price US$81.00↓ outlook despite not expecting discretionary demand to pick up in the back

half. Specifically, AM volumes should remain roughly flat sequentially from US$85.00

despite normal seasonal weakness driven by innovation wins and Renew Expected share price return 15.8%

momentum. In addition, asset utilization headwinds in the 1H should Expected dividend yield 4.8%

reverse into tailwinds for the back half of the year, while price/cost Expected total return 20.6%

dynamics become more favorable. 2) The reduction in circular growth Market Cap US$8,002M

revenue expectations seem to be driven roughly equally by production

constraints on the rPET side and slowness in customer adoption. That

being said, management was encouraged that customers are not backing

away from commitments for recycled content. 3) While management is Patrick CunninghamAC

assuming CI spread moderation in 2H, the dynamic situation in the SoH is +1-212-816-6684

causing uncertainty on the timing and magnitude. Importantly, customer patrick.cunningham@citi.com

destocking did not occur in June despite optimism on conflict de- Alexander Yi

escalation. +1-212-816-4220

alexander.yi@citi.com

Stock Action — Our FY26 EBITDA estimate increases by ~2% mostly on the 2Q Rachel Lee

performance and stronger operating margins in AM, A&FP, and Fibers, partially +1-212-816-4559

offset by lowered Fibers pricing in the back half.