In a report published Wednesday, BMO Capital Markets analyst Joel Jackson upgraded Compass Minerals CMP from Underperform to Market Perform, but lowered the price target from $75.00 to $73.00.
In the report, BMO Capital Markets noted, “Following CMP's material share price plunge, we raise our rating to Market Perform from Underperform, but lower our target price to $73 from $75. Despite lower earnings expectations (CMP may now be challenged to reach $5 of EPS until 2017), the sell-off has removed most of CMP's premium valuation, with CMP's disappointing bid season guidance for volume (awards still lagging pre-2012 levels) and pricing (2% lower pricing y/y so far) validating our prior concerns in April for such a scenario following a second consecutive below-average winter. Uralkali's abrupt change in operating strategy in the potash industry has lowered our expectations for MOP pricing, and we continue to expect lower SOP-over-MOP spreads (from current record levels) as CMP becomes less production constrained and brings on capacity at Great Salt Lake. Amid this, CMP's share price tends to have support around the $70 level.”
Compass Minerals closed on Tuesday at $73.06.
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