Citi Slaps A Sell Rating On Agrium Shares

In a report published Wednesday, Citi analysts downgraded the rating on

from Neutral to Sell, while reducing the price target from $111 to $95. "We have been cautious on the Ag sector heading into 2015, but recent anecdotes indicate to us that 1H15 weakness is likely more pronounced than previously thought, predominately hurting Agrium's Retail results," the analysts said. Recent calls with Monsanto Company

, E I Du Pont De Nemours And Co

and Syngenta AG

indicate high crop protection inventories. Moreover, any shift to soybeans from corn would be negative, since soybeans use about 30 percent less crop protection chemicals per acre. "We believe that AGU's 2015 guidance of $7.00-$8.50 is now a bit aggressive and a lot has to go right to exceed the mid-point of the range, in our view. We believe the upper end of the range is likely to come down," the analysts added. Agrium is well positioned in nitrogen, in view of advantaged gas in western Canada, and the newly expanded Vanscoy potash mine could boost the company's performance. "However, we think near-term weakness is likely in its Retail business," the report mentioned.