J.P. Morgan upgraded Potash Corp./Saskatchewan (USA) POT Friday from neutral to Overweight and raised its price target from $34 to $40.
Analyst Jeffrey J. Zekauskas expected Potash “to generate a 6.3 percent free cash flow yield in 2015 and a 7.1 percent free cash flow yield in 2016” as Potash currently pays a 4 percent dividend.
Zekauskas believed “that potash industry fundamentals have become more favorable. Potash inventories in the United States are now (35 percent) below their five year average.”
The upgrade follows November’s news that the Uralkali Solikamsk-2 mine was shut down after developing a sink hole, which pushed fertilizer stocks higher.
Potash shares spiked at Friday’s open amid the upgrade, trading at $37.77, up 2.40 percent.
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