Goldman Sachs Starts Potash Corp. (POT) at Buy, Says Potash Fundamentals Near Bottom

December 12, 2012 8:16 AM EST
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Price: $18.90 -0.05%

Rating Summary:
    15 Buy, 16 Hold, 8 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 35 | Down: 30 | New: 8
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Goldman Sachs initiates coverage on Potash Corp. (NYSE: POT) with a Buy rating and $46 price target, suggesting 15% upside. The firm cited leverage to a turn in potash fundamentals which they said are near a bottom.

The firm comments, "Following the recent announcement of production curtailments amounting to about 15% of annual capacity and broad-based inventory destocking, we believe potash fundamentals are approaching trough. Coupled with significant 2012 underperformance (POT -3% YTD vs. the S&P +13% and corn +14%) we believe risk/reward is increasingly attractive on a multi-year basis, with valuation now at 8.4x 2013 EV/EBITDA, a nearly 18% discount to the five-year average. Further, we believe the market is no longer giving POT credit for significant brownfield capacity expansions set to come online beginning in 2H2013 that should drive 20-25% K volume growth in 2014-15."

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 $40.90 yesterday.

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