Seeking Alpha

LyondellBasell upgraded to Top Pick at RBC

  • LyondellBasell (LYB +1.6%) is upgraded to Top Pick from Outperform with a $110 price target, up from $90, at RBC Capital, which cites strong organic and market driven growth potential and an under-levered balance sheet which should lead to $12B-$14B of potential cash for capital returns over the next three years.
  • Following 12%-16% EPS growth in 2012-13 mainly from higher U.S. ethylene margins (offset by weak refinery margins), the firm believes a pase of accelerated EPS growth of 25%-plus will begin in 2014 via three levers: low-risk, high-return capacity de-bottlenecks with staggered start-ups; share repurchases, assuming ~10% each year; and margin expansion and cost reductions.
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