UPDATE: Bank of America Downgrades Sociedad Quimica y Minera to Underperform, Lowers PT Following Potash Industry Break-Up

In a report published Tuesday, Bank of America analyst Fernando Ferreira downgraded the rating on

from Neutral to Underperform, and lowered the price target from $57.00 to $29.00. In the report, Bank of America noted, “We're downgrading SQM to Underperform from Neutral and slash our Price Objective to US$29 from US$57, as we cut our 2014-15 EPS by 27-44% to US$1.43 – 1.27/ADR, respectively. Our new PO is based on 20x P/E multiple on our 2014 EPS. We believe the break up in the potash industry is a game changer, and see potash prices declining materially from current levels. As such, we reduce our 2014 realized potash price to US$350/mt and US$300/mt in the long term. We still see downside risks to our new PO, as: 1) we expect a meaningful de-rating to the potash sector, as potash prices reset, and 2) potash prices might settle at even lower levels, as the marginal cost of production is near US$250/mt.” Sociedad Quimica y Minera closed on Monday at $37.11.