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Analysts Are Bullish on Methanex after Its Q3 2018 Earnings


Oct. 29 2018, Published 10:05 a.m. ET

Methanex’s third-quarter earnings

Methanex (MEOH) reported adjusted EPS of $1.92 in its third quarter, an increase of 9.71% over $1.75 in the previous year. It reported revenue of $1.044 billion in the third quarter compared to $950 million in the previous year.

MEOH reported record volumes in the quarter, matching its previous record. During the quarter, the price per ton of methanol stood at $413 compared to $405 per ton in the second quarter. Recently, it restarted its Chile IV plant for the first time since 2007, and it expects the plant to ramp up its production very soon.

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John Floren, president and CEO of Methanex, said, “Our higher Adjusted EBITDA and earnings in the third quarter reflects our strong sales volume and higher average realized price. Our sales volume in the third quarter of 2.9 million tonnes matched previous record levels. Our average realized price increased to $413 per tonne in the third quarter compared to $405 per tonne in the second quarter of 2018 as marginally higher industry supply was matched by strong methanol demand which sustained tight market conditions.”

Methanex’s stock performance

During a volatile week, Methanex’s stock price fell 9.9%, and it closed at $65.89 on October 26. The fall in the stock’s price marked a trend reversal in its 100-day moving average. MEOH is now trading 9.3% below its 100-day moving average price of $72.66.

Despite the significant fall in the stock’s price, it’s risen 8.8% on a YTD (year-to-date) basis. Analysts are bullish on the stock and have recommended a target price of $79.40, which implies a potential return of 20.5% over its closing price as of October 24. Methanex’s relative strength index of 32 indicates that the stock isn’t overbought or oversold.

Those looking to hold Methanex indirectly could invest in the Invesco WilderHill Progressive Energy ETF (PUW). PUW also provides exposure to FMC (FMC), Owens Corning (OC), and Lydall (LDL) at weights of 2.4%, 2.3%, and 2.0%, respectively, as of October 26.


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