Dahlman Rose & Co. Reiterates Buy on Methanex Corp. (MEOH)

Dahlman Rose & Co. is out with a research report this morning, which reiterates its Buy rating on Methanex Corp. MEOH; it has a $30.00 price target on the stock. The Dahlman analysts cited the company’s most recent earnings report, which were below their expectations. The company said that their average realized price of $287 per metric ton was up 48% year over year, but down 7% sequentially. The analysts cited some supply disruption that will lower Q3 earnings because of a facility outage; though, they believe that these temporary issues will work out over the next two quarters. The analysts expect “robust” earnings growth in FY 2011. The Dahlman analysts also said that, with the startup of its Egypt facility, cost should continue to fall. They expect the Egyptian facility to begin production in 4Q10 and ship a small amount of product before year-end. As for valuation, they remarked, “We have lowered our 2H10 earnings estimates due to the unfavorable sales shift toward purchased products. We expect 3Q10 EPS to be $0.10 (prior $0.32) and have lowered our 4Q10 estimate to $0.30 (prior $0.62). We have also reduced our FY11 estimate to $2.96 (prior $3.14). We are maintaining our Buy rating and $30 price target implying a 2010|2011 P/E multiple of 35.7x and 10.1x versus an adjusted peer group average of 15.1x and 11.5x."