Methanex (MEOH) PT Lowered to $40 at Raymond James

Raymond James analyst Steven Hansen lowered the price target on Methanex (NASDAQ: MEOH) to $40.00 (from $62.00) while maintaining a Outperform rating.

The analyst comments "We are lowering our target on Methanex to US$40.00 (vs. US$62.00 prior) to reflect a weaker macroeconomic outlook (i.e., trade tensions), lower energy prices, and retracing global methanol prices after a seasonally strong winter. Specifically, methanol prices have retreated ~22% YTD, slipping as idled winter capacity restarts (i.e., Iran) and global economic concerns escalate. More strikingly, Methanex shares have shed almost half their value (45% YTD) versus the TSX at -3.5%, arguably pulling forward all the bad news (& then some), with investors also likely fretting over proforma leverage once its OCI acquisition closes. While the deal timing now appears unlucky, the leverage appears manageable, in our view. That said, it raises questions whether management should push to renegotiate terms, or even walk altogether (break-fee implications). Either way, in light of the recent pullback, we flag that Methanex shares recently tripped some key value thresholds that historically represent very attractive entry points for LT investors. Reiterate OP2."

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