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On Monday, Jefferies analyst Laurence Alexander revised the price target for Methanex (TSX:MX) Corporation (NASDAQ:MEOH), a global methanol producer, to $64.00 from the previous $68.00. Despite the adjustment, the firm maintains a Buy rating on the stock, aligning with InvestingPro data showing the company is currently undervalued. The price target change was prompted by an unexpected outage at the company’s G3 facility in late February, which could potentially impact Methanex’s volume outlook for 2025, though analysts expect net income growth this year.
Alexander noted that the combination of the unplanned G3 outage and a pull-forward of planned maintenance for the same facility is anticipated to have the most significant negative operational effects in the second quarter. The company maintains strong financial health with a current ratio of 2.62, and its market valuation at 38% of replacement value suggests significant upside potential. This view is supported by InvestingPro’s analysis, which indicates robust financial metrics and a favorable free cash flow yield of 20%.
The analyst also pointed to the potential for new applications, particularly in the marine sector, to bolster structurally higher methanol prices over the next two to three cycles. This longer-term view suggests an optimistic outlook for Methanex’s financial performance beyond the immediate challenges.
Methanex’s stock performance will be monitored closely by investors as the company navigates through the operational impacts of the G3 outage. The firm’s outlook includes expectations of a recovery in share price, supported by new applications for methanol and a valuation that suggests considerable upside potential.
In other recent news, Methanex Corporation has been the subject of updates from major financial institutions regarding its stock outlook. UBS analyst Joshua Spector increased the price target for Methanex shares to $66, maintaining a Buy rating. Spector’s analysis considers the current methanol market dynamics and Methanex’s strategic positioning, with expectations that the market may retighten later in the year, leading to stable pricing. Meanwhile, BMO Capital Markets also raised its price target for Methanex to $65, keeping an Outperform rating. BMO’s analysts noted the tight global methanol market and the positive impact of Methanex’s recent acquisition of OCI’s methanol and ammonia assets on its financials. The firm projects that Methanex’s free cash flow could reach approximately $10 per share post-acquisition, with methanol prices expected to settle at a mid-cycle average of about $350 per ton. Both UBS and BMO have expressed confidence in Methanex’s ability to navigate the evolving market landscape, with their assessments reflecting a strong outlook for the company’s operational performance and future cash flows.
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