On Tuesday, Methanex (NASDAQ:MEOH) Corporation (NASDAQ:MEOH) experienced a change in stock rating as Barclays (LON:BARC) adjusted its stance on the company. The chemical manufacturer was downgraded from Overweight to Equalweight, and its price target was revised downward to $44.00 from the previous $56.00.
The revision by the analyst at Barclays reflects concerns over the risks associated with a transaction that Methanex is currently involved in. The analyst noted that while the strategic benefits for Methanex are clear in the long run, the risks related to the transaction might not be easily mitigated in the near future.
This perception could potentially keep the company's stock within a certain trading range over the upcoming year, provided that the macroeconomic environment remains stable.
Methanex, which deals in the production and supply of methanol, is now categorized by Barclays as an "inexpensive commodity chemical company with cyclical torque," a segment that is reportedly becoming increasingly populated.
The revised price target of $44.00 is based on approximately 7.5 times the firm's estimated 2024 earnings before interest, taxes, depreciation, and amortization (EBITDA) of $661 million. This is a decrease from the earlier valuation of roughly 8.5 times the estimated EBITDA.
The downgrade is attributed to the heightened level of uncertainty stemming from the pending deal. Barclays indicates that the current equity valuation does not seem to adequately reflect the risks associated with the transaction. It's important to note that the estimates provided by Barclays do not include any potential outcomes from the pending transaction involving Methanex.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.