UPDATE: Raymond James Initiates Outperform On Agrium On Diversification, Expected Rise In Urea Prices, And Superior Earnings Growth

In a report published Thursday, Raymond James analyst Steve Hansen initiated an Outperform rating on Agrium (NYSE: AGU) and initiated a price target of $106.00.In the report, Raymond James says "Agrium is one of the world's foremost agribusiness enterprises, in our view, positioned as a vertically-integrated manufacturer, marketer, and retailer of crop nutrients and farm-related inputs. Other key highlights include: Diversification is Delightful!—Agrium's diverse mix of Retail and Wholesale businesses has recently been cast by certain investors as a disparaging, value-suppressing attribute that warrants a break-up. However, when macro conditions sour (as they have recently), this same diversification quickly becomes a delightful attribute offering a reliable source of baseline (countercyclical) cash flow complemented by uniquegrowth and margin enhancement opportunities. We vie w this diversity as a cornerstone asset. China is Done “Breaking Bad” (For Now), Urea Prices to Rebound—We believe that domestic urea prices are bottoming and poised to bounce over the next 6-9 months after a precipitous ~60% drop from March 2012 levels. We expect this to help investor sentiment over this time period— even though we remain cautious over long-term nitrogen fundamentals.  Superior Earnings Growth, Modest Multiple—Agrium's unique business mix affords it a superior 2-year earnings growth profile vs. many of its closest large cap fertilizer peers—yet it commands a discounted earnings multiple, trading at just 9.9x and 6.3x our 2015 EPS and EBITDA estimates."Agrium closed on Wednesday at $89.73.