RBC Capital maintains Methanex stock Sector Perform rating

On Tuesday, RBC Capital Markets maintained their Sector Perform rating on Methanex (TSX:MX) Corporation (NASDAQ:MEOH) with a steady price target of $55.00. The firm’s analyst, Nelson Ng, noted that while there is economic uncertainty that may impact the company, Methanex’s stock valuation is becoming more attractive, especially to investors with a positive outlook on the global economy. Trading at a P/E ratio of 14.5x and near its 52-week low of $34.34, InvestingPro analysis suggests the stock is currently undervalued, with 12 key insights available for subscribers.

Methanex, a leading producer and supplier of methanol, is experiencing a period marked by indirect tariff concerns, potential global economic slowdown, and issues with the reliability of the Generation 3 (G3) technology. These factors contribute to the cautious stance taken by RBC Capital. Despite these challenges, the company maintains strong financial health with a current ratio of 2.62, indicating ample liquidity to meet short-term obligations.

Despite these challenges, Ng pointed out the appealing valuation of Methanex shares. The company’s stock price has been influenced by its sensitivity to methanol prices, which are subject to fluctuations based on various market factors. Notably, the stock has demonstrated a strong free cash flow yield and has maintained dividend payments for 24 consecutive years, with a current yield of 2.11%.

The ongoing economic uncertainty and the pending acquisition of OCI’s methanol and ammonia assets are additional reasons why RBC Capital has decided to uphold their Sector Perform rating. This acquisition is significant for Methanex as it could impact the company’s financials and market positioning.

Methanex’s stock performance will continue to be monitored by investors and analysts alike, as the company navigates through the current economic landscape and progresses with its strategic initiatives.

In other recent news, Methanex Corporation has been the focus of several analyst updates regarding its financial outlook and stock performance. UBS analyst Joshua Spector raised the company’s price target to $66, citing Methanex’s strategic positioning and potential for sustained profitability despite an expected decline in methanol prices. Similarly, BMO Capital Markets increased its price target to $65, highlighting the accretive impact of Methanex’s acquisition of OCI’s methanol and ammonia assets. BMO noted that the global methanol market remains tight, supporting Methanex’s operations.

Jefferies analyst Laurence Alexander adjusted Methanex’s price target to $64 due to an unplanned outage at the G3 facility, which could affect the company’s volume outlook for 2025. Despite this, Jefferies maintains a Buy rating, indicating confidence in Methanex’s potential recovery and future performance. Analysts from UBS and BMO also maintain positive ratings, reflecting a general optimism about the company’s ability to navigate market challenges and capitalize on emerging opportunities.

Projections for Methanex’s earnings and cash flow remain strong, with UBS forecasting EBITDA above consensus for 2025 and 2026. BMO anticipates a post-acquisition free cash flow of approximately $10 per share, up from previous estimates. These developments suggest a robust outlook for Methanex as it continues to adapt to changing market conditions and strategic shifts.

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