By Sam Boughedda
Analysts at BofA Securities, said in a research memo on Friday they are reiterating Buy ratings on fertilizer stocks CF Industries (NYSE:CF), The Mosaic Company (NYSE:MOS), and Nutrien (NTR).
In addition, CF Industries' price target was raised to $128 from $117, The Mosaic Company's price target was cut to $71 from $88, and Nutrien's price target was lowered to $130 from $141.
"Fertilizer markets have been extremely volatile the last two years, which has continued in recent months. Nitrogen (N) summer fill prices were surprisingly low while potash (K) prices remained firm," wrote the analysts. "Over the past couple of months N prices have recovered, led by ammonia which in the US is benefiting from a near-term fall application season and internationally by another steepening of the cost curve on high European nat gas prices and supply concerns."
The analysts added that Urea/urea ammonium nitrate had rebounded too, but to a lesser extent, and BofA forecasts another leg up as restocking progresses in 4Q22/1Q23.
"Ag fundamentals remain solid, with US corn/soybean prices at elevated levels and estimated farmer incomes for the '22/23 crop year still high, albeit off their prior-year record," the analysts added.
BofA's estimates and price target for CF were raised for 2H22/2023 "on the back of higher nitrogen prices, while it said MOS is seeing the steeper earnings cuts on softer P and K outlook, and the hit to NTR's profitability is "somewhat cushioned by a more stable Retail and stronger Nitrogen business."