Goldman Sachs Favorable on Fertilizers Into Q1, Especially CF Industries (CF)
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Rating Summary:
15 Buy, 16 Hold, 5 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Goldman Sachs commented on the fertilizer group into first quarter results. The firm is positive into the quarter and said a strengthening outlook and a low bar sets the group up favorably.
"Industry fundamentals have turned significantly more favorable since the last round of updates, with exceptional pricing gains in nitrogen (N) and tentative signs of a recovery in phosphate (P) and potash (K) materializing," the firm commented.
The firm has an especially positive bias on Conviction Buy List-rated CF Industries (NYSE: CF) and sees 10-15% upside based on exceptional nitrogen pricing trends.
For Neutral-rated Potash Corp. (NYSE: POT), they see a marginal miss for Q1 on weaker K sales with offset from improved N returns, and also see 7% downside risk to FY2012 consensus. That said, market expectations are already poor.
For Sell-rated Intrepid Potash, Inc. (NYSE: IPI), they see risk to EPS based on weaker-than-expected domestic potash prices and shipments. However, downside could be limited given recent underperformance and positive international K data points.
For Neutral-rated Agrium Inc. (NYSE: AGU), their trading bias is modestly positive into the quarter. The company should benefit from the positive turn in N prices, solid farmer demand ahead of spring season, and an upbeat management tone. However, Goldman is lowering Q1 EPS and sees downside risk to consensus on N production outages and weak potash sales.
"Industry fundamentals have turned significantly more favorable since the last round of updates, with exceptional pricing gains in nitrogen (N) and tentative signs of a recovery in phosphate (P) and potash (K) materializing," the firm commented.
The firm has an especially positive bias on Conviction Buy List-rated CF Industries (NYSE: CF) and sees 10-15% upside based on exceptional nitrogen pricing trends.
For Neutral-rated Potash Corp. (NYSE: POT), they see a marginal miss for Q1 on weaker K sales with offset from improved N returns, and also see 7% downside risk to FY2012 consensus. That said, market expectations are already poor.
For Sell-rated Intrepid Potash, Inc. (NYSE: IPI), they see risk to EPS based on weaker-than-expected domestic potash prices and shipments. However, downside could be limited given recent underperformance and positive international K data points.
For Neutral-rated Agrium Inc. (NYSE: AGU), their trading bias is modestly positive into the quarter. The company should benefit from the positive turn in N prices, solid farmer demand ahead of spring season, and an upbeat management tone. However, Goldman is lowering Q1 EPS and sees downside risk to consensus on N production outages and weak potash sales.
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