Canaccord Genuity Morning Coffee on Mosaic Company (MOS); Let’s Make A Deal

Canaccord Genuity Morning Coffee on Mosaic Company (NYSE: MOS); Let’s make a deal.

Mosaic announced that it has settled an outstanding legal dispute with Sierra Club, Manasota-88, and People for Protecting the Peace River regarding the federal wetlands permit at the Hardee County Extension of the South Fort Meade (SFM) phosphate mine. The settlement will allow Mosaic to resume mining at the SFM operation once a court approval is attained (assumed to be granted within a few weeks). The settlement resolves the dispute that had been going on for over 19 months. To reach this settlement, Mosaic offered a few concessions and in return, the company will have access to an extension that will offer Mosaic a further 10 years of phosphate rock production. Canaccord Genuity Agriculture Analyst Keith Carpenter had previously assumed in his earnings forecast that the court case would be resolved in Mosaic’s favour, and therefore there is no impact to his earnings forecast as a result of this settlement. Carpenter had applied a lower multiple to the shares of Mosaic due to the risk related to the timing and uncertainty of the final resolution of this process, which had been ongoing for over one-and-a-half years, and the potential impact it could have had on F13 estimates and beyond had it continued to be dragged out. As a result of the legal resolution, he is moving from a neutral to bullish stance on Mosaic and is increasing his target price. In the intermediate term, he continues to rank Agrium (NYSE: AGU) ahead of Potash Corp. (NYSE: POT) and Mosaic due to the timing issues surrounding the upcoming U.S. spring planting season.

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