Why It Could Be Time To Buy CF Industries' 'Aggressive Moves'

In a report published Friday, Barclays analyst Matthew J. Korn upgraded the rating on

from Neutral to Overweight, while raising the price target from $64 to $71, citing the company's two most recent major transactions as "proactive and positive." CF Industries announced a substantial off-take agreement as well as a $2.8 billion equity buy-in with the CHS co-op. These initiatives indicated that management had "no intention of resting on past laurels," analyst Matthew Korn said, while adding, "In a commodities/materials world that's rapidly changing, we are encouraged that CF clearly doesn't intend to simply play defense going into the next cycle." In the report Barclays noted, "CHS essentially gains an 8.9% claim on CF's operating income for $2.8 billion, while CF gets a locked-in buyer of 1.7mm product tons and sees another potential competing nitrogen plant disappear." Korn commented that the deals together highlighted that CF Industries recognized the need to "combine a low-cost position with the distribution breadth and market influence needed to protect that position." In case the transactions are completed as per expectation, the company's stock could "outperform the group." The EPS estimates for 2015 and 2016 have been raised from $4.40 to $4.47 and from $5.18 to 5.31, respectively.