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On Friday, Jefferies maintained a Buy rating on Methanex (TSX:MX) Corporation (NASDAQ:MEOH) but reduced the price target to $45 from the previous $49. Currently trading at $32.37, InvestingPro analysis indicates the stock is undervalued, with a P/E ratio of 10.2x. The adjustment follows observations of easing methanol market dynamics, with expectations of pricing moderation in the second quarter due to increased supply, lower energy costs, and heightened economic uncertainty.
Methanex management anticipates that these factors will contribute to a decrease in second-quarter earnings before interest, taxes, depreciation, and amortization (EBITDA) from its current $661.3 million. The company maintains strong financial health with a 2.29% dividend yield and has maintained dividend payments for 24 consecutive years. Despite the reduction in the price target, Jefferies’ analysis suggests that Methanex shares have the potential to at least double in value by the next peak in the methanol market.
The company’s current relative value (RV) stands at approximately 36%, which indicates a significant upside according to the Jefferies analyst. With a strong free cash flow yield of 26% and an overall GOOD financial health score, InvestingPro subscribers can access 8 additional key insights about Methanex’s financial position. The report also points to new applications of methanol, especially in the marine sector, as a potential driver for higher methanol prices over the next two to three cycles.
Investors are keeping a close eye on Methanex’s stock performance and future prospects in light of these revised expectations. The company’s strategic positioning and the anticipated growth in demand for methanol are key factors that could influence its stock trajectory in the coming years. Comprehensive analysis of these factors is available in the detailed Pro Research Report on InvestingPro.
In other recent news, Methanex Corporation’s financial and strategic developments have captured the attention of analysts and investors. Raymond (NSE:RYMD) James adjusted its price target for Methanex from $62.00 to $40.00, maintaining an Outperform rating amidst a weaker macroeconomic environment and declining methanol prices. RBC Capital Markets maintained a Sector Perform rating with a price target of $55.00, citing economic uncertainty and the company’s pending acquisition of OCI’s methanol and ammonia assets as factors. Jefferies revised Methanex’s price target to $64.00 from $68.00, keeping a Buy rating despite an unexpected outage at the G3 facility, which may impact future volume outlooks. UBS increased its price target for Methanex to $66.00, up from $53.00, while maintaining a Buy rating, highlighting the company’s potential for sustained profitability. UBS also projected higher-than-consensus earnings for 2025 and 2026, reflecting confidence in Methanex’s market positioning. The company’s stock performance and strategic initiatives continue to be closely monitored by analysts, with varying outlooks on its potential amid current market conditions.
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