Agricultural Science Company FMC Pressured From Worst Supply Chain Correction: Analyst

Mizuho Securities analyst Edlain Rodriguez downgraded FMC Corp FMC to Neutral from Buy with an unchanged price target of $59.

The re-rating is due to significantly pressured earnings in H2 FY23 owing to unprecedented pesticide inventory correction and elevated concerns about generic competition. 

Rodriguez says that while the long-term opportunities are encouraging, investors are unlikely to look through the near-term uncertainty until they gain more confidence that management can deliver. 

The analyst's 2024 EBITDA estimate of $1.09 billion is in line with consensus and is weighted towards H2. 

The analyst sees EPS and EBITDA of $3.86 and $1.0 billion for FY23 and $4.35 and $1.085 billion for FY24, respectively.

Last month, FMC announced a strategic review of non-core assets, which includes the potential sale of its non-crop product line, Global Specialty Solutions.

Earlier, FMC disclosed an outlook for FY24 revenue of $4.65 billion-$4.85 billion, adjusted EBITDA of $1.025 billion-$1.125 billion, and free cash flow conversion of greater than 100%.

Price Action: FMC shares are trading higher by 1.74% at $56.17 on the last check Thursday.

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