Citi Initiates Coverage on CF Industries

Citi Investment Research is out with a research report on CF Industries

and is initiating coverage with a Hold rating and a $196 price target on shares. In a note to clients, Citi Investment Research writes, "CF is benefiting from a potent one-two punch of strong agricultural fundamentals and a massive benefit from shale gas which has more than doubled nitrogen gross margins since 2007. Deteriorating yields for the US corn crop amid challenging weather conditions have tightened grain inventories. This has raised expectations for robust fall and spring nitrogen application as US growers prepare to potentially plant a record ~95mm corn acres in 2012. However, CF shares have already outperformed fertilizer peers by nearly 23% since the beginning of July, reflecting much of the positive news, in our view. While the stock may overshoot on the way up, we see limited upside to our $196 price target." Shares of CF lost 23 cents on Friday to close at $175.15.