Analysts cut Methanex estimates on Q1 profit drop

25 April 2008 15:26  [Source: ICIS news]

TORONTO (ICIS news)--Analysts at RBC Capital Markets and HSBC have cut their 2008 earnings estimates for Methanex following a sharp drop in the company’s first-quarter results announced yesterday, they said on Friday.

 

Toronto-based RBC cut its 2008 earnings per share (EPS) estimate for the Vancouver-based methanol producer to $2.34, from $2.96.

 

Also, Methanex expected second-quarter results to be significantly lower than the first quarter's, RBC added.

 

However, for 2009 RBC raised its EPS estimate to $1.34, from $1.15, mainly because of the restart of larger methanol capacities in New Zealand, it said.

 

Methanex had reached an agreement on the terms of gas supplies, allowing for the production of an incremental 400,000 tonnes/year of methanol in New Zealand until at least the end of 2009, RBC said.

 

Meanwhile, HSBC, the London-based international bank, cut its 2008 EPS estimate to $2.65, from $3.05, to reflect first-quarter results that were below estimates, it said.

 

Still, HSBC remained bullish on the long-term prospects of Methanex and the global methanol market.

 

“While the quarter’s results might be viewed as disappointing, we believe that they have little to no bearing on our longer-term bullish thesis on Methanex,” it said.

 

The current high energy price environment was likely to drive further increases of methanol demand in fuel applications, it added.

 

RBC has a target price of $24.00 for Methanex's shares while HSBC’s target is $35.00.

 

The shares were up 1.1% to $26.42 in early Friday morning trading on New York's Nasdaq.

 

($1 = €0.63)

By: Stefan Baumgarten
+1 713 525 2653

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