Jefferies Offers Q2 Preview on LyondellBasell Industries (LYB), Sees Q3 Margin Pressure as Manageable

Jefferies is reiterating its Buy rating and $56 price target on shares of LyondellBasell Industries (NYSE: LYB) while providing a Q2 preview.

The firm currently expects LYB to report EPS of $1.21 or better for Q2 with EBITDA of $1.297 billion. The Street is currently estimating EBITDA of $1.349 billion for Q2.

Jefferies is cutting its Q3 EBITDA estimate by $200 million due to margin pressure in polyolefins. The firm notes that the revision to PE margins now reflects a forecast of a $0.05-$0.06/lb quarter-over-quarter decline in ethylene margins and a $0.03/lb decline in PE margins.

A few topics in which the firm will be listening for in its conference call include, any color on demand trends in Asia; integrated margins in Europe; level of interest in new projects; and productivity initiatives for 2011-2012, especially at Berre.

An analyst from Jefferies comments, "We estimate typical business fluctuations can swing LyondellBasell’s quarterly results by $220-$250 million. Unscheduled plant outages can each be a $15-$20 million quarter-over-quarter hit, turnarounds can run as high as $50-$75 million, and even just one MTBE shipment can be a $4.2-$5.2 million swing in profits. As such, our revisions remain with the normal margin of error and are not intended to reflect a structural shift."

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 $40.88 yesterday.

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