By Adriano Marchese

Methanex shares rose Friday after JPMorgan upgraded the stock citing a compelling combination of a cheap valuation, high free cash flow, and an improving debt profile.

Shares traded 13% higher in Toronto at 53.40 Canadian dollars, the equivalent of US$38.18.

JPMorgan has upgraded the stock rating to overweight from neutral and brought the new target price to $38 from $33.

Based on the profits Methanex is expected to make in 2026, its stock price is trading at a discount compared to its own average price over the last seven years, according to analyst Jeffrey Zekauskas.

Zekauskas forecasts the methanol production company will produce free cash flow equal to 12.5% of its current share price, which will likely be used towards improving the company's balance sheet.

"We think there is room for the company's valuation to move higher in a global economy with stronger growth prospects given its high free cash flow yield," he said.

Methanol is primarily used as a feedstock in chemical manufacturing, especially for producing formaldehyde, acetic acid and increasingly as a fuel and energy carrier.

Zekauskas said that the company's performance isn't a guarantee. "The equity is not without risk as methanol values are cyclical and sensitive to the global oil price," he said.

Write to Adriano Marchese at adriano.marchese@wsj.com

(END) Dow Jones Newswires

October 31, 2025 11:17 ET (15:17 GMT)

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