2023-06-12 09:32:55 ET
Methanex ( NASDAQ: MEOH ) on Monday was downgraded to Sector Perform from a prior rating of Sector Outperform by analysts at Scotiabank. They said the distributor of methanol, an antifreeze and feedstock for other chemicals such as formaldehyde, faces weakening demand.
“We had hoped methanol market softness would be brief enough to look through it,” Ben Isaacson, analyst at Scotiabank, said in a June 12 report, “but the timing/magnitude of price declines, rising inventory, little-to-no cost curve support (Chinese thermal coal has just collapsed too), as well as continued China macro weakness, means visibility into ‘24 free cash flow has become blurred.”
Scotiabank lowered its price target on Methanex ( MEOH ) to $47 a share from $60 a share previously, based on a multiple of 8 times estimated EBITDA of $719 million for 2024.
Methanex's ( MEOH ) stock has gained 17% since the beginning of the year to $41.17 a share, compared with a 5.5% advance for the Standard & Poor's 400 midcap stock index ( SP400 ) ( MDY ).
“Hedge funds are right to short the stock here; we were wrong for waiting this long to react,” according to Scotiabank. “Methanex ( MEOH ) could offer a better entry-point in the $30s.”
Seeking Alpha columnist Wealth Analytics rates Methanex ( MEOH ) as a Hold based on its valuation and key risks .
More about Methanex
- Methanex names new CFO, announces other top level changes
- Dow, chemical makers upgraded at Piper Sandler
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Methanex downgraded to Sector Perform at Scotiabank; hedgies should sell short