Market Overview

JPMorgan Turns Bullish On Mosaic Co. Thanks To Higher Commodity Prices

Share:
JPMorgan Turns Bullish On Mosaic Co. Thanks To Higher Commodity Prices

Mosaic Co (NYSE: MOS), a producer and marketer of concentrated phosphate and potash crop nutrients, stands to benefit from rising commodity costs that create a favorable risk-to-reward profile, according to JPMorgan.

The Analyst

JPMorgan's Jeffrey Zekauskas upgraded The Mosaic Company's stock rating from Neutral to Overweight with a price target boosted from $26 to $30.

The Thesis

Mosaic's decision to lower its phosphate production in the U.S. through the idling of its plants comes at a time when India, a large phosphate importer, is sitting on low inventory levels, Zekauskas said in the upgrade note. China appears to have some sort of phosphate export issue, as export volume in the fourth quarter of 2017 was lower by 25 percent, the analyst said. At current rates, total annual production could fall by as much as 3 million tons.

These three factors are creating a "positive price dynamic" that bodes well for Mosaic's outlook, Zekauskas said. A $50/ton margin and price change in phosphate translates to an incremental $1 per share in earnings, the analyst said. Mosaic's free cash flow generation should increase accordingly from 3.6 percent for 2018 to 6.1 percent of its share price for 2019, he said. 

The analyst's new bullish stance is a direct result of the opportunity ahead, as higher phosphate prices should result in the company earning $1.50 per share in 2018 against a prior estimate of $1.40 per share and $1.85 in 2019 versus a prior estimate of $1.80.

Price Action

Shares of Mosaic Co were trading higher by 3.70 percent in the Wednesday morning session. 

Related Links:

Bernstein Explains Bullish Call On Mosaic

25 Stocks Moving In Wednesday's Pre-Market Session

Photo by Dennis Jarvis/Wikimedia. 

Latest Ratings for MOS

DateFirmActionFromTo
Dec 2019MaintainsUnderweight
Nov 2019DowngradesNeutralUnderweight
Nov 2019MaintainsHold

View More Analyst Ratings for MOS
View the Latest Analyst Ratings

Posted-In: Commodity Prices IndiaAnalyst Color Upgrades Price Target Commodities Markets Analyst Ratings Best of Benzinga

 

Related Articles (MOS)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
PAGMorgan StanleyMaintains60.0
ORLYMorgan StanleyMaintains460.0
OLLIMorgan StanleyMaintains65.0
NEEMorgan StanleyMaintains245.0
KRMorgan StanleyMaintains27.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com