TD Securities Upgrades Agrium (AGU) to Buy; Merger Seen Gaining Approval Late Q4 and Nutrien Offers Compelling Risk/Reward
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TD Securities upgraded Agrium (NYSE: AGU) from Hold to Buy with a price target of $134.00 (from $102.00) saying merger regulatory approvals likely to be completed by late-Q4/17.
Analyst Greg Barnes notes the companies are working with the U.S FTC on the final issues relating to superphosphoric acid (SPA) and nitric acid. "We understand that this may result in the divestment of two Agrium U.S.-based plants with capacities of ~170,000 tpa," the analyst commented. "Chinese and Indian regulators are intending to condition their approvals on the divestment of certain of PotashCorp's minority ownership interests (current combined market value: ~$6 billion)."
Barnes also noted steady FCF at current nutrient prices. The analyst notes the growth capex cycle is behind Nutrien. Assuming that $500 million in synergies are realized, they see Nutrien generating $3.17/share in FCF.
Shares of Agrium closed at $107.92 yesterday.
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