Stifel Upgrades Potash Corp. (POT) to Buy
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(Updated - September 14, 2016 9:47 AM EDT)
Stifel upgraded Potash Corp. (NYSE: POT) from Hold to Buy with a price target of $20. Analyst Paul S. Forward said the price target assumes completion of the Agrium merger, and a 33% risk-adjustment to the $500 million of expected merger synergies.
"The risk adjustment on the expected synergies reflects (1) the possibility of lower than expected operating and procurement synergies, (2) the possibility that antitrust concerns require an asset divestiture, and (3) the possibility that shareholders reject the merger. Of the three areas of risks, we believe the primary concern is related to the timing and size of realized operating and procurement synergies, while antitrust and lack of shareholder approval are lower probability events," said Forward.
The analyst added, "The merger benefits both Agrium and PotashCorp shareholders, in our view, by providing Agrium shareholders with backwards integration for its growing retail network as well as leverage to a rebound in nutrient prices, which we expect are approaching trough levels, and by providing PotashCorp shareholders shelter from a difficult nutrient price environment and access to growth in the form of Agrium's retail exposure."
Shares of Potash Corp. closed at $16.16 yesterday.
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