Market Overview

Bullishness On FMC 'Makes Sense,' BMO Capital Markets Says In Upgrade

Bullishness On FMC 'Makes Sense,' BMO Capital Markets Says In Upgrade
Related FMC
Benzinga's Top Upgrades, Downgrades For November 14, 2018
FMC's Q3 Earnings Outlook
Soybean futures fall 1.6%, as China purchase barely dents huge U.S. stockpile (Seeking Alpha)

Increased exposure to agriculture stocks like FMC Corp (NYSE: FMC) simply "makes sense" after the sentiment surrounding the sector likely troughed — albeit against depressed levels, according to BMO Capital Markets. 

The Analyst

BMO's Joel Jackson upgraded FMC from Market Perform to Outperform with a price target lifted from $90 to $95.

The Thesis

FMC said in late March that its first-quarter earnings will likely exceed the high end of its prior guidance range of $1.45 to $1.49, but its earnings could come in as high as $1.66 per share, Jackson said in the upgrade note.

The chemical manufacturer has been able to leverage its business in Brazil to sell DuPont crop protection chemicals and is better able to leverage DuPont's Indian channel for its legacy crop protection, the analyst said.

In addition, the incremental costs to operate the acquired business are proving to be less than expected, and cost synergies are tracking closer to $80 million rather than FMC's guidance of $60 million, according to BMO. 

Investors should be aware of six risks, Jackson said:

  • FMC remains a "crowded long" trade.
  • The lithium valuation debate will be front-and-center in the $500-million IPO offering of FMC's lithium business.
  • The company could see more costs from the DuPont business over time.
  • Competitive concerns.
  • Lithium expansion delays and weather issues in Argentina.
  • Potential deterioration in the entire agriculture segment.

Price Action

Shares of FMC were up 2.03 percent at the close Thursday. 

Related Links:

A Soy Story: Citi Upgrades Grain Processors Archer Daniels, Bunge

Baird: Albermarle Is The Best Lithium Cycle Play

Latest Ratings for FMC

Dec 2018Credit SuisseMaintainsOutperformOutperform
Nov 2018BuckinghamInitiates Coverage OnBuy
Nov 2018Loop CapitalReinstatesBuy

View More Analyst Ratings for FMC
View the Latest Analyst Ratings

Posted-In: agriculture BMO Capital Markets Crop Protection grainsAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga


Related Articles (FMC)

View Comments and Join the Discussion!

Latest Ratings

SYBXChardan CapitalInitiates Coverage On20.0
GEJP MorganUpgrades6.0
FEYEMorgan StanleyDowngrades21.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
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
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

6 Reasons Why Goldman Sachs Turned Neutral On U.S. Silica Holdings

Ellie Mae Downgraded: As Mortgage Origination Market Matures, Wedbush Sees Limited Upside Potential