Loop Capital Downgrades FMC Corp. (FMC) to Hold

Loop Capital analyst Christopher Kapsch downgraded FMC Corp. (NYSE: FMC) from Buy to Hold with a price target of $55.00 (from $68.00).

The analyst comments "We are somewhat begrudgingly moving to the sidelines on FMC, in downgrading our rating to Hold from Buy, and reducing our price target to $55. We do not believe FMC's franchise is broken, per se, and we do believe there is still good potential a "normalization" trade – once the protracted destocking activity across the global Crop Protection chemicals industry more fully runs its course. But if FMC cannot reliably calibrate and/or identify the magnitude of its own product channel inventories in key overseas regions (particularly Latam/Brazil and Asia/India), then we find it increasingly difficult to have confidence in our own and/or Street consensus estimates, particularly in the out years. In other words, earnings visibility is not great. Moreover — and perhaps more pointedly, with respect to our revised Hold rating — FMC acknowledged that substantial excess inventories for key insecticide products, including its flagship Diamides, continue to persist in the very important agriculture market in India. If inventory destocking in the Diamides and/or other insecticide products is going to be a drag on demand trends through all of 2024 and into 2025, as FMC indicated would be the case on its F4Q23 earnings call last week, then "uncertainty" around the root causes for this continued headwind seems likely to undermine investor confidence, as well as weigh on sentiment and FMC's valuation — at least for several quarters, if not longer. This sentiment overhang is now factored into our revised valuation framework, reduced $55 price target (down from $68) and rating downgrade to Hold from Buy."

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

Shares of FMC Corp. closed at $51.75 yesterday.

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