Credit Suisse Gets Salty On Compass Minerals, Downgrades To Underperform

Compass Minerals International, Inc. CMP is down 15 percent year-over-year, and one analyst thinks the sidewalk salt and resource distributor could continue slipping.

The Rating

Credit Suisse analysts Christopher Parkinson, Graeme Welds, Kieran de Brun and Harris Fein downgraded Compass Minerals to Underperform and lowered their price target from $63 to $60.

The Thesis

The analysts see multiple risks to Compass Minerals’ performance: seasonal conditions in Brazil, mild winters, pressure on sulfate of potash premiums as muriate of potash prices fall, and increasing transportation costs driven by driver shortages, fuel expenses and capacity constraints.

Enduring headwinds in salt inventories and uncertainty around quality at the Goderich mine only bolster the pessimistic outlook.

“The weaker 1H18 guide places significant pressure on 2H18 to deliver much needed growth, but we believe multiple risk factors blur earnings visibility,” the analysts wrote.

Altogether, they expect an increase in freight costs coupled with flat volumes in Plant Nutrition North America to pressure margins.

Price Action

At time of publication, shares were trading down 5.4 percent at $64.

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