Methanex: Undervalued with Strong Long-Term Prospects Despite Short-Term Challenges

Jefferies analyst Laurence Alexander has maintained their bullish stance on MEOH stock, giving a Buy rating on March 3.

Laurence Alexander has given his Buy rating due to a combination of factors that suggest Methanex has significant upside potential. Despite an unplanned outage at the G3 plant in Louisiana, which is expected to impact the company’s production in the short term, Methanex is currently trading at a substantial discount to its replacement value. This suggests that there is room for the share price to potentially double as the market corrects this undervaluation.
Furthermore, the long-term outlook for Methanex is bolstered by new applications, particularly in the marine sector, which are likely to support higher methanol prices over the next few years. While the immediate effects of the G3 outage will be felt in the second quarter, the costs associated with repairs are not expected to be significant. Overall, the combination of undervaluation and positive long-term demand trends underpins the Buy rating.

In another report released on March 3, Scotiabank also maintained a Buy rating on the stock with a $66.00 price target.