Methanex Maintained at Buy at TPH Following Q1 Results; Price Target at US$72.00
Tudor, Pickering, Holt on Friday maintained its buy rating on the shares of Methanex (MX.TO, MEOH) with a US$72.00 price target following the methanol producer's first-quarter results."We raise our Q2'26 EBITDA outlook to $562mm from $400mm (vs $471mm consensus) after MEOH surprised to the upside at $220mm in Q1 and offered guidance of $500-525/tonne realized margins for Apr-May, a big step up from $351/tonne in Q1. At the midpoint, MEOH's guidance has realized margins improving +$162/tonne q/q, less than the +$206/tonne q/q move in global spot methanol QTD. Typically MEOH's realizations are >100% of spot. However, management noted that due to typical pricing lags between spot and contract, when spot prices surge up, capture will come down. We see this trend in the historical data as well, and would expect MEOH to catch up when methanol prices eventually fall. Other moving parts in Q2 include a greater contribution from the small ammonia business, with prices at $775/tonne vs $450 in Q1, as well as cheaper US feedstock costs with natgas lower q/q. Even if the Strait were to reopen tomorrow, we believe it would take several quarters to normalize on global methanol production and inventories. We also roll in positive revisions to H2 estimates and now have MEOH at a TPHe 27% FCF yield (15% FCF to EV)," analyst Matthew Blair wrote(covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www..com/contact-us)Price: $86.20, Change: $-2.68, Percent Change: -3.02%