On Thursday, Deutsche Bank (ETR:DBKGn) adjusted its price target for K+S AG (SDF:GR) (OTC: KPLUY), a global potash and salt producer, to EUR9.75 from the previous EUR10.00, while keeping a Hold rating on the stock. The revision follows the bank's expectations of a decrease in the company's earnings before interest, taxes, depreciation, and amortization (EBITDA) for the third quarter of 2024.
The bank anticipates a 6% year-over-year drop in Q3 EBITDA to EUR68 million, compared to the Bloomberg consensus of EUR74 million. This decline is attributed to reduced pricing which is expected to more than offset the gains from higher sales volumes. Furthermore, Deutsche Bank forecasts a significant 47% quarter-over-quarter reduction in EBITDA from EUR128 million in Q2, due to traditionally lower volumes during maintenance in the agricultural segment and a decrease in the average selling price from EUR313 per ton in Q2 to EUR303 per ton.
Looking ahead to the fourth quarter, Deutsche Bank projects a substantial increase in EBITDA, anticipating a 126% rise from the third quarter level to EUR154 million. This optimistic outlook is based on the expectation of seasonally higher agricultural volumes which are likely to compensate for a sequential 4% drop in the average agricultural selling price to EUR292 per ton.
The bank's analysis reflects a cautious stance on K+S AG's short-term earnings potential, while also acknowledging possible improvements in the company's performance towards the end of the year.
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