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BMO Recommends Selling Into Strength on Fertilizer Names, Lifts Price Targets Across the Board

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BMO Capital's Joel Jackson issued a somewhat bearish research note on the Fertilizer sector Wednesday morning. The analyst suggested investors should "sell into strength from the recent rebound." Jackson maintains a Market Perform rating on the industry.

Jackson warned of premiums related to "the typical Jan/Feb spring lift and BPC 2.0 price-over-volume reunion prospects" which might already be baked into the stocks. The BMO analyst also noted the following concerns:

  • consensus estimates for 2014, 2015 which need to come down;
  • "materially lower" crop prices;
  • US urea may cool off following an "overheating";
  • limited further price boosts in the phosphate group;
  • deteriorating supply and demand dynamics in potash; and
  • the potential for potash prices in China to disappoint.

Agrium (NYSE: AGU) and Yara remain Jackson's top picks for the space. He noted each of these companies have not yet "seen the MLP-hype like CF" (NYSE: CF). Jackson maintains Market Perform ratings on Potash (NYSE: POT) and Mosaic (NYSE: MOS) shares and an Underperform rating on Interpid Potash (NYSE: IPI).

The BMO analyst boosted his price target on CF Industries from $215 to $225, on Intrepid Potash from $11 to $12, on Mosaic from $40 to $4 and the Potash price target from $28 to $30.

The Market Vectors Agribusines ETF (NYSE: MOO) is up 0.5 percent heading into Wednesday's close.

Latest Ratings for AGU

DateFirmActionFromTo
Jan 2015Standpoint ResearchDowngradesBuyHold
Jan 2015Miller TabakDowngradesBuyHold
Nov 2014Bank of AmericaDowngradesNeutralUnderperform

View More Analyst Ratings for AGU
View the Latest Analyst Ratings

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