Jefferies Remains Positive on LyondellBasell (LYB), Ethane Advantage Beginning to Widen

Jefferies is reiterating its Buy rating and $56 price target on shares of LyondellBasell Industries (NYSE: LYB) as it anticipates that the ethane advantage will recover in June and July.

The company announced $2.5 billion in interest carryforwards, which are available to offset future taxable income in the US. The firm notes that with a 30% tax rate the carryforwards represent $750 million in future tax savings.

LYB plans to complete restructuring in Europe by mid-2012. The company intends to reduce O&P Europe headcount by 20%. Jefferies estimates LyondellBasell could take out $700-$1,000bn in cost over the next 5 years through productivity initiatives and restructuring.

An analyst at Jefferies comments, "With polyethylene exports at 30-year highs recently and a key factor keeping the US market tight, shifts in the export window could swing LyondellBasell shares. We believe a decline could be short-lived. Overall we estimate many buyers do not have the capacity to hold more than 4 weeks of inventory, and anecdotally companies in Asia appear to expect recent inventory destocking in Asia to reverse by July."

For more ratings news on LyondellBasell Industries click here and for the rating history of LyondellBasell Industries click here.

Shares of LyondellBasell Industries closed at $39.75 yesterday.

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