07 January 2013 19:55 [Source: ICIS news]
Lyondell is planning to increase US ethylene capacity by 1.6bn-1.8bn pounds, or 17-19%, by the end of 2015, which will enable it to raise its ability to crack cheap ethane from 85% to 90% in the next three years, Deutsch said.
As a result, Lyondell is targeting an additional $1bn of earnings before interest, tax, depreciation and amortisation (EBITDA).
Because Deutsch is expecting an ethylene cycle peak in 2015-2016 that would add another $2bn to EBITDA, the investment bank is raising Lyondell’s price target to $70.
Lyondell performed well in 2012, trading from a low of $34.24 to a high of $59.17, Deutsch said.
Other key drivers include Lyondell’s restart of a La Porte methanol plant in Texas, as well as company restructuring in Europe, the bank said.
Deutsch is raising Lyondell’s projected earnings by 15% to $6/share for 2013, with the potential to earn $10/share in 2016.
$1 = €0.76
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