BNS Upgrade Following the restart of construction on its Geismar 3 project, Scotia Capital analyst Ben Isaacson raised his Methanex Corp. (MEOH-Q, MX-T) target to US$40 from US$37, maintaining a “sector perform” rating, while TD Securities analyst Cherilyn Radbourne bumped up her target to US$54 from US$51 with a “buy” rating. The average on the Street is US$43.83.
“While G3 had been a controversial project with investors in recent years, there are several reasons why the restart of G3 construction is a net positive for the stock: (1) whether or not we agree with Methanex’s S/D assessment, one thing is clear: the cost curve has steepened dramatically on the back of near-record thermal coal and LNG prices in China + gas in Europe; (2) G3 will materially strengthen the overall reliability of Methanex’s asset portfolio, which had been in decline over the past 18 months; and (3) G3 will boost Methanex’s global methanol market share and sphere of influence, and as a result, potentially allow Methanex’s realized discount to its contract prices to improve over time,” said Mr. Isaacson.