UBS Upgrades Methanex (MEOH) to Buy, 'FCF on the rise'

UBS analyst Joshua Spector upgraded Methanex (NASDAQ: MEOH) from Neutral to Buy with a price target of $60.00 (from $51.00).

The analyst comments "We upgrade Methanex to Buy as we see the company transitioning to a period of lower investments and improved cash returns, which we believe are underappreciated. There could still be some near-term volatility in methanol pricing as MEOH starts up its' new G3 unit and global demand remains choppy, but we see market indications that methanol prices could move up another ~5%, to mid-cycle levels. Better pricing and a step down in capex post-G3 investment should drive 2025 EBITDA/FCF ~30%/150% above 5yr avg (>$200M/yr lift). 2024 is still a transition year, but within the next couple of quarters we believe the market will get more visibility of MEOH's forward EBITDA/FCF generation. Our updated 2025 EBITDA of $923M is 4% above cons, and $458M in FCF reflects a ~15% FCF yield at curr trading. Our updated PT reflects ~33% upside & ~11% FCF yld, most commodity peers trade at ~8% yld."

For an analyst ratings summary and ratings history on Methanex click here. For more ratings news on Methanex click here.

Shares of Methanex closed at $44.94 yesterday.

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