TD Newcrest Likes PotashCorp (POT) At Current Levels
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TD Newcrest is making a contrarian call on Potash Corp. of Saskatchewan, Inc. (NYSE: POT), which has been annihilated, along with the entire fertilizer group, recently as industry pricing is weak.
The firm said, "Given the prevailing weak potash market as demonstrated by the recent potash price decrease by Kali + Salz (SDF-XE; unrated), POT's potash production cut announcement and reduced Q2/09 earnings guidance, and overhang from the India/China and Canpotex/Belarusian Potash Co.’s (BPC) ongoing potash contract negotiations, we speculate that investor sentiment will likely be neutral for Potash Corp. due to a lack of positive catalysts at least for the near-term. However, despite our forecast of lower than consensus earnings in 2010, we would be opportunistic buyers at around US$85/share, but caution that patience will be required."
The firm is maintaing their Neutral rating and $100 price target on POT. They see 2010E EPS of US$8.65, which is below current consensus of US$10.70. POT will report Q2/09 earnings before market open on July 23.
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