Morgan Stanley Resumes Coverage On CF Industries

Morgan Stanley resumed an Overweight rating on CF Industries Holdings, Inc. CF with a $300 price target in a report issued Monday.

Analyst Vincent Andrews predicated his view on "1. CF as the leading low cost producer of North American nitrogen from cost advantaged US shale gas; 2. $1.0B (~8 percent of DSO) remaining on its existing share repurchase program with another ~$1B (~8 percent) possible from levering to its upside target of ~2.5-times debt-to- EBITDA...3. ~30 percent volume growth from plant startups beginning in 2H15 which should generate ~$750 million of EBITDA and allow for an additional $1.875B (~15 percent) of buybacks."

The price target assumed a "9 percent FCF yield on $32 of FCF in 2016+ using an ~8 percent discount rate back to today CF. We expect CF to trade to $300 as the certainty of this FCF increases due to the passage of time, the maintenance of at least status-quo nitrogen fundamentals, and the absence of material CapEx overruns for its new plants."

CF Industries Holdings, Inc. recently traded at $247.94, up 1.22 percent.