TD Securities Upgrades Potash Corp. (POT) to Buy

TD Securities upgraded Potash Corp. (NYSE: POT) from Hold to Buy with a price target of $38.00. Analyst Greg Barnes thinks the stock is discounting a flat potash market, but he sees positive momentum heading into 2015.

"We believe that after the pull-back in the company’s share price over the past three months, it is reflecting weaker crop prices and bumper harvests in North America. Our model suggests that the stock is discounting a flat global potash market for 2015 (at ~58 million tonnes), a decline in the Midwest West price to an average of $375/st (versus the current price of ~$410-415/st) and a lower forward EBITDA multiple of 9x," said Barnes. "These assumptions run counter to what appears to be happening, at least into H1/15 – global potash prices are climbing higher (albeit slowly), there is a growing consensus that 2015 global demand should be ~60Mt (+1 2 Mt YoY, and we note that POT’s average forward EBITDA multiple over the past 15 years is 10.1x."

"Although we acknowledge that increased potash supply in 2015 could dampen prices as producers maneuver for market share, we believe that this could have a greater impact in H2/15. In the interim, the company is expanding its production capability to take advantage of demand opportunities," he added.

For an analyst ratings summary and ratings history on Potash Corp. click here. For more ratings news on Potash Corp. click here.

Shares of Potash Corp. closed at $32.54 yesterday.

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