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Agribusiness Stocks: Wall Street Views before July Earnings

PART:
1 2 3 4 5 6 7 8 9
Part 2
Agribusiness Stocks: Wall Street Views before July Earnings PART 2 OF 9

Fewer Wall Street Analysts Are Covering PotashCorp

PotashCorp

Potash Corporation of Saskatchewan (POT) started this year with a lot of hope for the reversal of a weak potash market. The stock reached a peak of $19.9 in January. However, this enthusiasm was short-lived. In its 4Q16 earnings release in January, the company delivered a -22% surprise, and the stock raced to the bottom of $18.5 per share in the following two days.

Fast forward to July 13, and the stock was trading even lower at $17.4—which is almost 13% lower than its peak in January this year. As of July 14, six analysts have dropped their coverage on the stock over the year.

Fewer Wall Street Analysts Are Covering PotashCorp

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Analysts’ ratings

According to Reuters’ survey of 20 analysts, the mean rating on the stock was at 2.6 with an overall “hold” recommendation on the stock for the next 12 months. Out of the 20 analysts surveyed, only two had a “strong buy” recommendation and five had a “buy” recommendation for the next 12 months. The majority of analysts still have a “hold” recommendation on the stock, while only two analysts had a “sell” recommendation for the next 12 months.

PotashCorp’s merger with Agrium (AGU) should mean access to a large network of the US retail network. This move will likely put more pressure on Mosaic (MOS) and Intrepid Potash (IPI), which could fight to keep their respective market (XLB) shares.

Price target

As of July 13, the consensus mean price target on PotashCorp stood at $20.36 to be achieved in the next 12 months. However, the median price target for the company was $19, which indicates that a larger number of analysts have price targets below the consensus mean price target.

The median price target would deliver an upside of almost 9% over the next 12 months if the current price were to converge with the target.

In the next part of this series, we’ll cover Agrium.

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