Fertilizer shares jump around on analyst's note
MINNEAPOLIS (AP) — Shares of fertilizer and agriculture companies were jostled by an analyst note on Wednesday that concluded that not all nutrients are created equally, and adjusted ratings on the stocks accordingly.
Citi analyst P.J. Juvekar upgraded Agrium Inc. to "buy," from "neutral," with a price target of $118. Juvekar also added Agrium to Citi's "Top Picks Live!" list, writing that farmers are poised for record profits of $122 billion this year, thanks to high grain prices and insurance payments because of the U.S. drought. Agrium will benefit from demand for seeds and crop chemicals and services, Juvekar wrote.
Juvekar noted that more than half of Agrium's wholesale profit comes from nitrogen, a nutrient that needs to be applied every year. That makes it a more reliable source of revenue than phosphates and potash, which have "somewhat less robust" outlooks, Juvekar wrote.
That prompted a downgrade to "neutral" from "buy" for Potash Corp. of Saskatchewan. Its shares fell 86 cents, or 2 percent, to $42.02 in midday trading. Agrium shares were up $2.14, or 2.1 percent, to $103.69.
Juvekar also removed fertilizer maker Mosaic from Citi's "Top Picks Live!" list, saying it's not immune to weakness in the potash market, but its phosphate business is 45 percent of profits and is holding up better. Mosaic retained its "buy" rating. Its shares fell 7 cents to $60.26.
Juvekar put a "neutral" rating on CF Industries Holdings Inc., saying it will benefit from its nitrogen concentration, though Agrium's business is more stable. CF Industries shares rose $4.71, or 2.2 percent, to $216.