Trimming Near-Term Outlook for Specialty Chemicals; Valuations Attractive and Offer Margin of Safety

In light of our broader forecast for an economic slowdown, we have reduced our outlook for the three specialty chemicals firms Celanese, DuPont, and Eastman. We have updated our models to assume lower 2023 and 2024 revenue growth rates in the specialty chemicals segments. For Celanese and Eastman's commodity chemicals segments, we continue to assume falling crude oil prices will lead to lower commodity chemicals prices and profits, as marginal cost commodity chemicals producers typically use Brent oil-based feedstock, which informs prices. Our long-term and midcycle assumptions are unchanged as we expect specialty chemicals firms will resume growth in line with their respective end markets following a slowdown.