Scotia Capital Maintains Sector Outperform On Potash
Scotia Capital is out with a research report on Potash Corp./Saskatchewan (NYSE: POT) as it previews earnings. It has a $63 price target and a Sector Outperform rating on shares.
In a note to clients, Potash Corp./Saskatchewan (USA) (NYSE) writes, "Potash. Prices continue to trend higher; U.S. potash inventories are near record lows; producers are sold out in the short term; and we expect India's potash contract settlement (~$500/mt) to act as a strong catalyst.
MOS read-thru. POT should realize a $58/mt (to $424/mt) higher potash price QOQ, compared to MOS' $48/mt increase (to $404/mt) - timing differences are why. POT's potash margins should expand, while MOS' contracted due to higher potash taxes/royalties.
Fall. Channel checks suggest that U.S. pre-buying is "normal to elevated"; U.S. farmer economics are still 2x to 3x above historical levels, making yield maximization (through fert use) key for the fall.
We expect a beat. We are looking for Q2/11 EPS @ 90¢, or a 7% beat to the Street's 84¢ estimate (up from 82¢)."
Shares of POT are up 62 cents in pre-market trading to $61.33.
