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Investing.com - RBC Capital upgraded Methanex (NASDAQ:MEOH) from Sector Perform to Outperform and set a price target of $50.00. According to InvestingPro data, the stock appears undervalued, trading at an attractive PEG ratio of 0.48 and maintaining strong financial health metrics.
The upgrade follows Methanex’s completion of its acquisition of OCI’s methanol assets, which has provided better visibility for the company’s future performance according to RBC Capital.
The passage of the OBBB in the United States and progress on U.S. tariff negotiations were also cited as factors contributing to the improved outlook for the methanol producer.
At the 15-year average methanol price of approximately $350 per metric ton, RBC Capital estimates Methanex will generate an annual run-rate of about $1 billion in Adjusted EBITDA before cost synergies, driving a free cash flow yield of approximately 18%.
RBC Capital expects Methanex will have sufficient financial flexibility to reduce its debt-to-EBITDA ratio below 3.0x and initiate share buybacks in the second half of 2026. The company’s strong financial position is evidenced by its current ratio of 3.17, indicating ample liquidity to meet short-term obligations.
In other recent news, Methanex Corporation has received regulatory clearance for its planned acquisition of OCI Global’s international methanol business, with the transaction expected to close on June 27. This development follows the expiration of the review period under the U.S. Hart-Scott-Rodino Antitrust Act, with all necessary approvals now obtained. In terms of analyst ratings, Raymond (NSE:RYMD) James raised its price target for Methanex to $45, citing better-than-expected methanol price trends due to global supply disruptions. Meanwhile, Piper Sandler upgraded Methanex’s stock rating from Neutral to Overweight and increased its price target to $48, driven by positive outcomes from the last quarter and an enhanced outlook for midcycle earnings potential.
Additionally, Jefferies maintained a Buy rating but lowered its price target to $45, reflecting expectations of pricing moderation in the methanol market due to increased supply and lower energy costs. JPMorgan initiated coverage with a Neutral rating and a $33 price target, noting Methanex’s strategy of focusing on methanol production in regions with low natural gas prices. These recent developments offer investors a detailed view of Methanex’s current market positioning and potential future performance.
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