JPMorgan upgrades Methanex stock rating to Overweight on strong cash flow

Investing.com - JPMorgan has upgraded Methanex (NASDAQ:MEOH) from Neutral to Overweight and raised its price target to $38.00 from $33.00, citing strong free cash flow generation and attractive valuation metrics.

The investment bank expects Methanex to generate free cash flow equivalent to 12.5% of its share price in 2026, with approximately $4.20 per share in free cash flow that year. The company plans to use this cash to reduce its financial leverage, according to JPMorgan.

The firm projects Methanex’s leverage ratio will improve to 3.6x by year-end 2025 and further decrease to 2.9x in 2026. JPMorgan notes that Methanex currently trades at 5.6x EBITDA based on the bank’s 2026 estimates, below its seven-year average forward multiple of 6.0x.

JPMorgan describes Methanex as "the most inexpensive of the petrochemical commodities," highlighting that the methanol industry is not aggressively adding capacity over the coming years. The bank acknowledges that methanol values remain cyclical and sensitive to global oil prices.

Methanex shares have declined 32% year to date, significantly underperforming compared to the S&P’s 16% rise during the same period.

In other recent news, Methanex Corporation has been the focus of several significant developments. RBC Capital has upgraded Methanex’s stock to an Outperform rating, citing improved visibility following the company’s acquisition of OCI’s methanol assets. The upgrade also includes a price target of $50.00. In a similar move, National Bank Financial initiated coverage on Methanex with an Outperform rating and a price target of $47.00, reflecting confidence in the company’s performance. Additionally, Methanex announced strategic partnerships to expand its methanol bunkering operations in Europe and Asia, specifically in the Amsterdam-Rotterdam-Antwerp region and South Korea. These partnerships involve collaboration with TankMatch to enhance barge-to-ship methanol bunkering services. These recent developments underscore Methanex’s efforts to strengthen its market position and expand its operational capabilities.

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