UPDATE: Goldman Sachs Resumes Potash at Buy on Leverage to Turnaround in Fundamentals
Goldman Sachs resumed coverage on Potash (NYSE: POT) with a Buy rating and a $46 price target.
Goldman Sachs said, "Following the recent announcement of production curtailments amounting to about 15% of annual capacity and broad-based inventory destocking, we believe potash fundamentals are approaching trough. Coupled with significant 2012 underperformance (POT -3% YTD vs. the S&P +13% and corn +14%) we believe risk/reward is increasingly attractive on a multi-year basis, with valuation now at 8.4x 2013 EV/EBITDA, a nearly 18% discount to the five-year average. Further, we believe the market is no longer giving POT credit for significant brownfield capacity expansions set to come online beginning in 2H2013 that should drive 20-25% K volume growth in 2014-15."
Potash closed at $40.90 on Tuesday.
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