Market Overview

Citigroup Cuts Mosaic To Neutral, Says Phosphate Supply Outstrips Demand

Share:
Citigroup Cuts Mosaic To Neutral, Says Phosphate Supply Outstrips Demand

With the entry of new competitors, phosphate fundamentals have weakened, according to Citigroup. 

Moves by Mosaic Co (NYSE: MOS) to improve supply dynamics by curtailing capacity are unlikely to result in a significant upturn, the sell-side firm said in a Friday downgrade. 

The Analyst

Citigroup’s P.J. Juvekar downgraded Mosaic from Buy to Neutral and reduced the price target from $38 to $30.

The Thesis

Given new competitor capacity in Morocco and Saudi Arabia, both of which have lower cost structures, Mosaic is being forced to protect pricing by cutting production, Juvekar said in the downgrade note. 

Although Mosaic has significantly lowered costs, the surplus supply is causing intense pressure, the analyst said. While there could be a slight rebound in phosphate fundamentals in spring, it would be short-lived, he said.

Phosphate supply will likely continue to exceed demand in 2019 and 2020, unless China curtails capacity, Juvekar said.

Against this backdrop, phosphate prices may remain mostly flat over the next few years, the analyst said. 

Citigroup cut its EPS estimates for Mosaic for 2019, 2020 and 2021 from $2.35 to $2.30; from $2.78 to $2.35; and from $3.12 to $2.60, respectively, to reflect lower phosphate volumes and prices.

Juvekar recommends Nutrien Ltd (NYSE: NTR) instead, citing a diversified business and strong balance sheet.

Price Action

Mosaic shares were trading 1.21-percent higher at $27.50 at the time of publication Friday. 

Related Links:

Benzinga's Top Upgrades, Downgrades For March 29, 2019

Benzinga's Top Upgrades, Downgrades For March 26, 2019

Photo by Jason Parker-Burlingham/Wikimedia. 

Latest Ratings for MOS

DateFirmActionFromTo
Nov 2019DowngradesNeutralUnderweight
Nov 2019MaintainsHold
Nov 2019DowngradesOverweightNeutral

View More Analyst Ratings for MOS
View the Latest Analyst Ratings

Posted-In: Citigroup P.J. JuvekarAnalyst Color Downgrades Price Target Analyst Ratings Best of Benzinga

 

Related Articles (MOS + NTR)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
POWLSidoti & Co.Maintains47.0
XDeutsche BankInitiates Coverage On121.0
WTEBMO CapitalMaintains18.0
DOLBMO CapitalMaintains50.0
NABMO CapitalMaintains69.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
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.
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

Today's Pickup: Lyft Is Now LYFT: NASDAQ

FMCSA Hopes To Clarify What Constitutes An "Agricultural Commodity" With New Rule