Cemex Upped to Buy at Bank of America Amid Turnaround Momentum and Cost Controls

Cemex has been upgraded to Buy from Neutral by Bank of America Securities due to stronger cash generation, aggressive cost reductions and improving cement demand. The analysts believe these factors will drive a multiyear recovery for the company.

Bank of America Securities has upgraded Cemex (NYSE:CX) from Neutral to Buy, citing strong cash generation, aggressive cost reductions, and improving cement demand as key drivers for a multiyear recovery. The upgrade was announced in a report dated October 15, 2023, by Carlos Peyrelongue and his team of analysts, as reported by Seeking Alpha.

The analysts highlighted five catalysts supporting Cemex's turnaround: improved cash conversion, $400 million in cost savings from 2025 to 2027, a rebound in Mexico’s cement market, higher margins, and favorable currency effects. They project 2025 earnings before interest, taxes, depreciation, and amortization (EBITDA) to reach $3.86 billion and anticipate operating margins to rise by 130 basis points through 2027.

New CEO Jaime Muguiro is focusing on shareholder returns, including an additional $400 million in cost savings, smaller-scale acquisitions, and greater cash distributions through buybacks and dividends. The bank expects total savings of $600 million to $800 million through 2027, with capital expenditures dropping from $3 billion in 2024 to $1 billion by 2027. This reduction in capital spending is projected to boost free cash flow and fund shareholder payouts.

BofA also noted material improvements in Cemex's U.S. and European operations, with dollar-based debt and energy costs stabilizing. The bank's revised valuation implies a forward price-to-earnings ratio of 11.5 times and an enterprise value-to-EBITDA multiple of 7.4 times for 2026, reflecting confidence in the company's restructuring strategy and continued earnings growth. The price objective was raised to $10.80 per ADR from $10 previously.