Stifel update identifies top fertilizer industry investments – 24/7 Wall St.

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When agricultural equipment maker Deere announced its first-quarter results two weeks ago, the stock price fell to a 52-week low, less than a month after shares hit an all-time high . The fall in the share price was partly due to rising costs for farmers. Fuel, fertilizer and new equipment all cost more and prices will go up. The overall assessment is that farmers need to purchase fuel, fertilizer and other supplies before purchasing new equipment.

Stifel analysts recently released an update on the fertilizer market and how it will affect the three major fertilizer manufacturers: Mosaic Co. (NYSE: MOS), CF Industries Holdings Inc. (NYSE: CF) and Nutrien Ltd. . (NYSE: NTR). Firm analysts expect “a more normalized pricing environment [for]service, although it all depends on some return to normalcy, particularly in the area of ​​energy.

Crop prices are expected to remain high due to weather-related supply constraints, and high fertilizer prices have led manufacturers to dust off old capacity expansion projects. Stifel analysts note:

These projects certainly carry execution and schedule risks, but we believe that the significant disruption caused by the conflict in Ukraine and China’s indecisiveness as a marginal exporter are prompting net importing countries to revisit projects that, although not necessarily economically competitive in normalized price environments, provide significant security of supply. We plan to monitor this more closely.

Nutrien

Nutrien was formed in 2018 when a merger between two Canadian fertilizer makers (Agrium and Potash Corp. of Saskatchewan) created the world’s largest potash miner in a deal valued at around $36 billion. , debt included. Stifel maintained its Buy rating on the stock while lowering its price target from $125 to $123. The stock was trading at around $94 as of midday Friday.

In their rating comments, analysts noted:

We favor Nutrien for its balanced, high-quality exposure to the fertilizer markets, given the company’s significant assets in potash and nitrogen, as well as its defensive position in plant-based retail. Nutrien is also unique in its strong portfolio of accretive tuck-in retail acquisitions, [its] potential for larger M&A deals in Brazil [and its proven execution of] redeployment of capital from recent major disposals…

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Price target risks include commodity price risk, macroeconomic and geopolitical risk, management’s inability to execute cost reduction plans, and operational and regulatory input risks. agricultural.

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