Jefferies Cuts Price Target on LyondellBasell Industries (LYB), Q4 Margins at Risk
Tweet
Share
E-mailGet Alerts LYB Hot Sheet
Price: $68.10 +3.09%
Rating Summary:
14 Buy, 15 Hold, 6 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
Rating Summary:
14 Buy, 15 Hold, 6 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
Join SI Premium – FREE
Jefferies is reaffirming its Buy rating on shares of LyondellBasell Industries (NYSE: LYB) while lowering its price target from $48 to $39.
Following a decline in ethylene spot prices in the past weeks and high cash costs, integrated U.S. polyethylene margins look to decline by $0.07/lb. quarter over quarter in the fourth quarter.
Currently, workers at LYB's Berre, France refinery and integrated olefins unit are on strike. Jefferies estimates that the strike would affect the company's margins by $11 million as the olefins unit represents around 20 percent of the company's European ethylene capacity.
An analyst at Jefferies comments, "The main impact of the recent decline in U.S. propylene contract prices will be higher effective ethylene cash costs for production using naphtha/propane. Asia cash costs will likely not rise to the same degree. As the company is net neutral propylene in the U.S., the margin impact on its derivatives should be relatively muted. In addition, propylene prices falling faster than ethylene should impact metathesis profitability."
The firm is cutting its 2011 EPS and revenue estimates from $5.10 and $53.53 million to $4.70 and $52.08 million. For 2012 and 2013, Jefferies forecasts EPS of $3.60 and $5.60.
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 $26.52 yesterday.
Following a decline in ethylene spot prices in the past weeks and high cash costs, integrated U.S. polyethylene margins look to decline by $0.07/lb. quarter over quarter in the fourth quarter.
Currently, workers at LYB's Berre, France refinery and integrated olefins unit are on strike. Jefferies estimates that the strike would affect the company's margins by $11 million as the olefins unit represents around 20 percent of the company's European ethylene capacity.
An analyst at Jefferies comments, "The main impact of the recent decline in U.S. propylene contract prices will be higher effective ethylene cash costs for production using naphtha/propane. Asia cash costs will likely not rise to the same degree. As the company is net neutral propylene in the U.S., the margin impact on its derivatives should be relatively muted. In addition, propylene prices falling faster than ethylene should impact metathesis profitability."
The firm is cutting its 2011 EPS and revenue estimates from $5.10 and $53.53 million to $4.70 and $52.08 million. For 2012 and 2013, Jefferies forecasts EPS of $3.60 and $5.60.
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 $26.52 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Jefferies Upgrades Fortescue Metals Group Ltd. (FMG:AU) (FSUGY) to Hold
- Jefferies Reiterates Hold Rating on Progressive Corp. (PGR)
- Jefferies Starts Faraday Copper Corp (FDY:CN) (CPPKF) at Buy
Create E-mail Alert Related Categories
Analyst CommentsRelated Entities
Jefferies & CoSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
