Market Overview

One Stock Ready To Survive A Rough Agriculture Environment

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One Stock Ready To Survive A Rough Agriculture Environment

  • In a report issued Friday, analysts at Cowen upgraded FMC Corp (NYSE: FMC)’s rating from Market Perform to Outperform.
  • However, the firm trimmed its price target on the stock from $60.00 to $51.00.
  • Shares of FMC are about flat on Friday trading.
  • According to a recent report from Cowen, analysts Ahmed Alamin, Charles Neivert and Jeffrey Rossetti boosted their rating on FMC because they see an ameliorated risk/reward profile at current valuations, which already reflect the weaker backdrop in the agricultural segment and “uncertain crop protection demand.”

    Despite of the tough agricultural markets, they believe the mid-cap diversified chemical company has the potential to grow earnings by more than 20 percent on the back of “Cheminova synergies that look achievable, with potential upside” – which should offset macro headwinds.

    Related Link: Top 4 Small-Cap Stocks In The Agricultural Chemicals Industry

    In fact, they noted, FMC’s specialty offerings combined with its augmented “scale and geographic diversity” make it a Tier 1 provider. This “allows it to better defend pricing/margins.”

    Moreover, the experts added, even though the company will face some near-term pressure, they still like “the crop protection business model that has low fixed costs, non-cyclical end-markets, and has shown low correlation to economic cycles with 20-percent-plus operating margins.”

    All About Internal Measures

    FMC’s earnings growth thesis is driven by internal measures rather than ameliorating conditions in the agricultural segment.

    The research note explained, “Unlike commodity agricultural chemicals (NPK), FMC focuses on differentiated specialty formulations, which, (along with its improved scale) allow the company to better defend its prices and margins.” In addition, the analysts see a high probability of synergy upside from the management's $120 million estimate.

    Disclosure: Javier Hasse holds no stakes in any of the securities mentioned above.

    Image Credit: Public Domain

    Latest Ratings for FMC

    DateFirmActionFromTo
    Aug 2019UpgradesSector PerformOutperform
    Aug 2019UpgradesNeutralBuy
    Aug 2019MaintainsOutperform

    View More Analyst Ratings for FMC
    View the Latest Analyst Ratings

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