CLSA Upgrades CF Industries To Buy Following Cancellation Of OCI Tax Inversion

Shares of CF Industries Holdings, Inc. CF have rallied more than 2 percent Tuesday following an earlier upgrade to Buy via CLSA's Mark Connelly. CF shares have moved about 15 percent since the start of June.

Connelly boosted his price target on shares from $33 to $34.

The CLSA analyst cited "the cancellation of the OCI tax inversion and the continued rise in negative sentiment."

"Without significant tax benefits, we believe the OCI deal would have saddled CF with negative net synergies. Urea prices are unsustainably low, in our view, and while CF’s financial flexibility is limited by leverage near term, we anticipate room for buybacks and debt repayment in the second half, growing steadily in 2017. M&A, including Wever, are likely to remain high on the wish list, but low on the probability list, until CF’s cash flow is stronger," according to Connelly.