JPMorgan Upgrades Mosaic After Stock Falls Close To 10-Year Low

Mosaic Co MOS stock has underperformed the market over the past one, three, five and 10 years, according to JPMorgan. 

Following this consistent underperformance, the sell-side firm said the stock now represents a positive trading opportunity, especially since the company has simplified its approach to value creation and is taking steps to create long-term shareholder value.

The Analyst

Jeffrey Zekauskas upgraded Mosaic from Neutral to Overweight and reduced the price target from $33 to $27.

The Thesis

Mosaic’s stock has underperformed the market by 18 percent over the last year; by 41 percent over three years; by 104 percent over five years; and by 258 percent in the past decade, Zekauskas said in the Wednesday upgrade note. (See his track record here.) 

While stating the main reasons for the stock’s poor showing, the analyst said the recent pressure has dragged the share price within $3 of the 10-year low. The stock is now trading below book value, even after considering the likely write-downs of its Plant City phosphate complex in the third quarter. 

The company is focusing on increasing cost efficiencies in its domestic and Brazilian markets, Zekauskas said. Mosaic is also enacting a long-term solution to water-inflow issues at its Esterhazy potash mine, he said. 

Mosaic should be able to deliver better and more normal business performance in 2020, in JPMorgan's view with a FCF yield approaching 12 percent.

Price Action

Mosaic shares were trading up 3.53 percent to $24.07 at the time of publication Wednesday. 

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