BofA Securities raises Cemex stock price target to $8.00 on lower cost of capital

BofA Securities raised its price target for CEMEX (CX) to $8.00 from $7.30, maintaining a Neutral rating, citing a lower cost of capital, even as the stock trades near its 52-week high with a 41% year-to-date gain. The firm projects challenging Q2 conditions with EBITDA of $818 million, slightly below consensus, due to anticipated weakness in U.S. and Mexican markets, including a 10% year-over-year decline in Mexican cement volumes, though strong European operations may provide a partial offset. CEMEX recently completed a $1 billion offering of subordinated perpetual notes and approved a $130 million cash dividend to be distributed in installments starting June 2025.

Analysis

BofA Securities has raised its price target on CEMEX (CX) to $8.00 while reiterating a Neutral rating, an action driven by a lower cost of capital in its valuation model rather than an improved fundamental outlook. This adjustment comes as CEMEX's stock trades near its 52-week high, having registered a 41% gain year-to-date. Despite this price momentum, the analyst firm projects a challenging second quarter, with an EBITDA forecast of $818 million that falls slightly below the $824 million consensus estimate. The anticipated weakness is concentrated in the U.S. and Mexican markets, underscored by a significant 10% year-over-year decline in Mexican cement volumes for April and May according to INEGI data. This regional headwind, amplified by CEMEX's higher-than-peer exposure to Mexican infrastructure projects, is expected to be only partially offset by solid performance in its European operations. Concurrently, CEMEX has strengthened its capital position by completing a $1 billion offering of subordinated perpetual notes and has signaled a commitment to shareholder returns by approving a $130 million cash dividend, although distributions are not scheduled to begin until June 2025.

Key Decisions for Investors

• Investors should weigh the stock's strong 41% year-to-date performance against the explicit near-term caution from BofA, whose Neutral rating and below-consensus EBITDA forecast highlight potential headwinds.
• Monitor upcoming Q2 results closely for confirmation of the forecasted volume weakness in North American markets, as this will be a key test of the current valuation and outlook.
• Consider the recent $1 billion perpetual note offering as a positive for balance sheet stability, but note that the announced $130 million dividend will not provide cash returns to shareholders until payments commence in mid-2025.
• Recognize that the price target increase is a valuation recalibration based on cost of capital, not an upgrade on operational performance, suggesting that further upside may be limited until fundamental metrics in key markets improve.