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Fertilizer Maker Makes Hay on Nitrogen (AGU, CF, POT, MOS, MON)

Paul Ausick — Wed, 09 May 2012 12:33:28 +0000

Getting any respect in the fertilizer business has been pretty tough so far this year. We’ll have to wait about an hour or so this morning to see if Agrium Corp. (NYSE: AGU) can defy history. The company reported first quarter results this morning, posting adjusted EPS of $1.32 on revenues of $3.63 billion. Analysts were expecting EPS of $0.99 on revenue of $2.98 billion.

Agrium attributed its increased sales to higher volumes and higher prices for nitrogen. Last week, CF Industries Holdings Inc. (NYSE: CF) also blasted through estimates, but the company’s best seller was also its nitrogen products. Potash Corp. of Saskatchewan Inc. (NYSE: POT) missed earnings estimates on lower potash sales and margins (gross margins fell -56% year-over-year). The Mosaic Co. (NYSE: MOS) also missed on earnings as potash volumes fell and phosphate costs rose. Monsanto Co. (NYSE: MON) pounded EPS estimates, but analysts believe that sales were all pulled forward due to the warm weather.

Agrium and CF are less dependent on potash and phosphates than are the others, and the rise in nitrogen is directly related to its ability to boost yields on the same amount of acreage. Potash fertilizer is needed to ensure healthy plants, but its contribution yields is less important.

Whether demand for nitrogen will continue through the Northern Hemisphere’s growing season remains to be seen, but as more people demand more food on the same amount of acreage, sales and margins on nitrogen are likely to keep pace.

The catch in Agrium’s results is that the company’s first half adjusted EPS guidance is a relatively weak $5.50-$6.10. Analysts had been expecting $5.67 before today’s blowout number. Investors are likely to interpret the lowish guidance as an indication that Agrium’s sales were also pulled forward into the first quarter.

Shares of Agrium are trading up about 0.13% at $84.68 in a 52-week range of $60.15-$93.49.

Paul Ausick

Filed under: Agriculture, Earnings, Food, Pre-Market Activity Tagged: AGU, CF, MON, MOS, POT

Monsanto Posts Big Numbers (MON, MOS, POT, CF, AGU)

Paul Ausick — Wed, 04 Apr 2012 13:09:01 +0000

Seed and fertilizer maker Monsanto Co. (NYSE: MON) reported second fiscal quarter earnings this morning that set a record for the quarter. The company also boosted its EPS outlook for the full fiscal year.

Monsanto, along with Mosaic Co. (NYSE: MOS), Potash Corp. of Saskatchewan Inc. (NYSE: POT), CF Industries Inc. (NYSE: CF), and Agrium Inc. (NYSE: AGU), has seen its share price rise steadily since the first of the year. Agrium and CF Industries are up around 30% year-to-date, while Monsanto is up about 17%, Potash Corp. up about 12%, and Mosaic up more than 4%.

Monsanto reported second quarter revenue of $4.75 billion compared with a consensus estimate of $4.53 and EPS of $2.24 compared with a consensus estimate of $2.12. The company also guided full-year EPS to $3.49-$3.54, slightly better than the consensus estimate of $3.51. The company’s CEO predicted continuing growth:

We’ve seen contributions from growth across crops and geographies, which position us well to deliver high-teens ongoing earnings growth this year

The company’s seeds and genomics business posted revenue of $3.9 billion, up $503 million from the same period a year ago. Monsanto attributed the increase to its sales of corn seed, particularly in the US. The company’s fertilizer business grew from $710 million in the second quarter a year ago to $824 million this year.

Shares of Monsanto are up about 1.6% in the pre-market at $83.09 in a 52-week range of $58.89-$83.95.

Paul Ausick

Filed under: Agriculture, Commodities, Earnings, Food Tagged: AGU, CF, MON, MOS, POT

Potash Fertilizer Makers Get Bump on US Planting Estimates (POT, MOS, CF)

Paul Ausick — Fri, 16 Mar 2012 17:03:39 +0000

US plantings of wheat and corn this year will be higher than the most recent US Department of Agriculture survey according to new survey results from Allendale Inc. cited by Bloomberg News. The firm forecasts that corn planting will rise to more than 95 million acres, higher than last year’s total of 91.9 million acres and higher than last month’s USDA forecast of 94 million acres. Wheat planting will rise to nearly 57 million acres.

Potash fertilizer makers are getting a nice share-price bump on the news, with Potash Corp. of Saskatchewan (NYSE: POT) rising more than 5.5%, Mosaic Co. (NYSE: MOS) up about 4.25%, and CF Industries Holdings Inc. (NYSE: CF) up about 2.35%.

Shares of Potash Corp. and Mosaic are down about -17% and -24%, respectively, over the past 12 months. CF Industries’ shares are up about 46% in the same period, mostly on the strength of the demand for nitrogen fertilizer.

Filed under: Agriculture, Commodities, Food Tagged: CF, MOS, POT

Is Corn This Serious For Potash & Fertilizer? Yes, Maybe (MOS, POT, CF, IPI, MOO)

Administrator — Thu, 12 Jan 2012 16:26:21 +0000

Fertilizer stocks are on skid row after the U.S. Department of Agriculture report showed that the unsold corn supplies from December were down about 1% less than what analysts were expecting. Like it or not, corn is a key driver and the fertilizer and potash stocks are taking it on the chin.

The Mosaic Co. (NYSE: MOS) is down by about 3.6% at $53.03 on close to 4 million shares, against a 52-week range of $44.86 to $89.24. The larger rival and former takeover target of Potash Corp. of Saskatchewan Inc. (NYSE: POT) is down by 3.8% at $42.12 versus a 52-week range of $38.42 to $63.97.

CF Industries Holdings Inc. (NYSE: CF) is down by 3.7% at $161.00 and its 52-week trading range is $115.34 to $192.70.

Intrepid Potash Inc. (NYSE: IPI) is down the least with shares down “only 2.6%” on the day at $24.07 and against a 52-week range of $20.75 to $40.22.

Using an exchange traded fund can emphasize just how bad things are and the Market Vectors Agribusiness ETF (NYSE: MOO) is down 1.2% at $49.39 versus a 52-week range of $39.86 to $57.93.

With so much corn used in food for humans, ethanol, and animal feedstocks, corn unfortunately is a key driver for the fertilizer and potash markets.

Sadly, things brings up the question… Just how much do the potash and fertilizer markets depend upon the taxpayer-funded farm subsidies in America? Probably more than any of us care to think.

JON C. OGG

Filed under: Agriculture, Commodities, Economy, Politics, Tax Tagged: CF, IPI, MOO, MOS, POT

Top Analyst Upgrades & Downgrades (CF, DLPH, EA, EL, MCK, RSH, SRE, SNE, TDC, VMW, YHOO)

Administrator — Tue, 27 Dec 2011 13:29:02 +0000

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street research calls this Tuesday morning. It is generally light in analyst coverage the week between Christmas and New Years, but there are also some great hidden gems during this time.

CF Industries Holdings Inc. (NYSE: CF) named as value stock of the day by Zacks Investment Research.
Delphi Automotive (NYSE: DLPH) Initiated as Outperform at Credit Suisse; Started as Buy at Bank of America Merrill Lynch; Started as Overweight at J.P.Morgan; Started as Outperform at R.W. Baird.
Electronic Arts Inc. (NASDAQ: EA) Maintained Neutral with $28.00 price target at Bank of America Merrill Lynch.
Estee Lauder Companies (NYSE: EL) raised to Outperform as Bull of the Day by Zacks Investment Research.
McKesson Corp. (NYSE: MCK) Reiterated Hold at Argus.
RadioShack Corporation (NYSE: RSH) Cut to Underperform as Bear of the Day by Zacks Investment Research.
Sempra Energy (NYSE: SRE) Reiterated Buy with $61 price target objective at Argus.
Sony Corporation (NYSE: SNE) target cut in Japan by Barclays.
Teradata Corporation (NYSE: TDC) added to US 1 focus list at Bank of America Merrill Lynch.
VMware Inc. (NYSE: VMW) Raised to Outperform at Oppenheimer.
Yahoo! Inc. (NASDAQ: YHOO) Maintained Buy with $18.00 price target objective at Bank of America Merrill Lynch.

JON C. OGG

Filed under: Analyst Calls Tagged: CF, DLPH, EA, EL, MCK, RSH, SNE, SRE, TDC, VMW, YHOO

24/7 Wall St. Closing Bell (HPQ, KO, LEN, PEP, CREE, ANN, CPWM, HNZ, CRMT, CRM, BONT, CF, MOS, FSCI, CLWR, MTOR, MRVL)

Paul Ausick — Fri, 18 Nov 2011 21:09:39 +0000

Stocks got off on a positive note this morning, but resisted the temptation to climb based on a positive reading of the leading econonmic indicators and higher estimates of US GDP growth in the fourth quarter. Consumer spending appears to be higher than expected and retailers’ inventories are falling which should lead to some re-stocking before the holiday shopping season kicks in with real force. Crude oil prices have fallen about -1.4% today, to below $97.50/barrel. Volume has been reasonably heavy as today brings the expiration of options. Gold prices are up a bit at $1,725.80. See our earlier story on the countries that own the world’s gold.

The unofficial closing bells put the DJIA up more than 25 points to 11,796.23 (0.22%), the NASDAQ fell more than 15 points (-0.60%) to 2,572.50, and the S&P 500 fell 0.04% or about 0.48 points to 1,215.65.

There were several analyst upgrades and downgrades today, including Hewlett-Packard Co. (NYSE: HPQ), which was raised to ‘buy’ at Sterne Agee. Other action included The Coca-Cola Co. (NYSE: KO) started as ‘buy’ at Jefferies; Lennar Corp. (NYSE: LEN) cut to ‘neutral’ at Citigroup; Pepsico Inc. (NYSE: PEP) started as ‘hold’ at Jefferies; and Cree Inc. (NASDAQ: CREE) started as ‘buy’ at Goldman Sachs.

Here are today’s big post-earnings news reactions with prices during the last half-hour of trading: Ann Inc. (NYSE: ANN) is down more than -6.6%, at $23.63; Cost Plus Inc. (NASDAQ: CPWM) is up more than 3%, at $7.88; H.J. Heinz Co. (NYSE: HNZ) is down more than -3%, at $51.06; America’s Car Mart, Inc. (NASDAQ: CRMT) is up more than 10%, at $35.84; Salesforce.com (NYSE: CRM) is down more than -10.5%, at $112.67; and The Bon-Ton Stores, Inc. (NASDAQ: BONT) is down more than -8%, at $2.84, after posting a new 52-week low of $2.70 earlier today.

Several other standouts from today are as follows…

CF Industries Holdings, Inc. (NYSE: CF) is up about 2.9%, at $152.46. The company’s stock got pounded yesterday on news that the corn prices fell, but are recovering a bit today as investors remember that falling corn prices don’t necessarily mean that less corn will be planted and, thus, less fertilizer will be used.

The Mosaic Co. (NYSE: MOS) is up more than 4.6%, at $53.12. Another fertilizer maker that got slammed yesterday and is recovering somewhat today.

Fisher Communications Inc. (NASDAQ: FSCI) is up about 12.7%, at $29.20. The broadcast TV station operator has sold its Fisher Plaza building in Seattle for $160 million in cash to Hines Global REIT, Inc.

Clearwire Corp. (NASDAQ: CLWR) is down nearly -21%, at $1.47. The company is reported to be considering skipping a $237 million debt payment due in two weeks, raising fears that the wireless broadband provider could end up in bankruptcy.

Meritor, Inc. (NYSE: MTOR) is down about -9.7%, at $5.12, after posting a new 52-week low of $5.11 earlier in the day. Shares lost -17% earlier this week when the company lowered its guidance for 2012 and the stock was downgraded today from ‘buy’ to ‘hold’ at KeyBanc.

Marvell Technology Group Ltd. (NASDAQ: MRVL) is up more than ;6.8%, at $14.70. The chip maker reported so-so earnings yesterday, but strong positive statements by analysts at FBR and Citi have turned broken eggs into an omelette.

Stay tuned for Monday. Atlanta Federal Reserve Bank president Dennis Lockhart is speaking in Brazil. Here’s a list of other noteworthy events (all times Eastern):

8:30 a.m. – Chicago Federal Reserve Bank national activity index
10:00 a.m. – National Association of Retailers existing home sales report

Have a great weekend.

Paul Ausick

Filed under: Analyst Calls, HI/LOW, Market Close Tagged: ANN, BONT, CF, CLWR, CPWM, CREE, CRM, CRMT, FSCI, HNZ, HPQ, KO, LEN, MOS, MRVL, MTOR, PEP

Top Analyst Upgrades & Downgrades (AA, AMZN, ATHN, CHS, CF, FSLR, GPS, GG, LNKD, NTAP, PCLN, QIHU, SHLD, STT, UAL)

Administrator — Mon, 03 Oct 2011 12:16:53 +0000

These are some of this Monday’s top analyst upgrades, downgrades, and initiations seen having an impact from Wall Street research calls.

Alcoa, Inc. (NYSE: AA) Cut to Hold at Deutsche Bank.
Amazon.com Inc. (NASDAQ: AMZN) Raised to Buy at Stifel Nicolaus.
Athenahealth, Inc. (NASDAQ: ATHN) Started as Outperform as Bull of the Day at Zacks.
Chico’s FAS Inc. (NYSE: CHS) Cut to Hold at KeyBanc.
CF Industries Holdings, Inc. (NYSE: CF) named value stock of the day at Zacks.
First Solar Inc. (NASDAQ: FSLR) Cut target to $80 from $135 at Credit Suisse.
Gap Inc. (NYSE: GPS) Cut to Hold at KeyBanc.
Goldcorp Inc. (NYSE: GG) Raised to Buy at Deutsche Bank.
LinkedIn Corporation (NYSE: LNKD) Started as Hold at Citigroup.
NetApp, Inc. (NASDAQ: NTAP) Raised to Buy at Citigroup.
Priceline.com Incorporated (NASDAQ: PCLN) Raised to Overweight at Morgan Stanley.
Qihoo 360 Technology Co. Ltd. (NYSE: QIHU) Started as Buy with $24 target at BofA/ML.
Sears Holding Corporation (NASDAQ: SHLD) maintained Underperform as Bear of the Day at Zacks.
State Street Corporation (NYSE: STT) Cut to Hold at Jefferies.
United Continental Holdings, Inc. (NYSE: UAL) Cut to Hold at Citigroup.

Here is a detailed summary list of the top analyst calls from Wall Street last week. Many were cautious.

JON C. OGG

Filed under: Analyst Calls Tagged: AA, AMZN, ATHN, CF, CHS, FSLR, GG, GPS, LNKD, NTAP, PCLN, QIHU, SHLD, STT, UAL

Demand for Grain to Lift Fertilizer Prices (MOS, POT, AGU, MON, CF, SYT, MOO)

Administrator — Thu, 29 Sep 2011 14:29:57 +0000

Fertilizer maker The Mosaic Co. (NYSE: MOS) reported earnings for its first fiscal quarter of 2012 after markets closed yesterday, and the company posted earnings and revenues that were in-line or slightly better than the upbeat forecast it gave just a week ago. EPS came in a $1.17 on revenue of $3.1 billion. EPS grew by 75% year-over-year and revenues were up by 41%. Gross margins also rose, from 23% in the same period a year ago to 28% in the first quarter.

Mosaic gives the first indication of overall strength among the other fertilizer makers. Potash Corp. of Saskatchewan, Inc. (NYSE: POT) is expected to post EPS of $0.93 for the quarter ending this month, more than double its EPS of $0.44 in the same period a year ago. Agrium Inc. (NYSE: AGU) is expected to show EPS of $1.85 in same period, up from EPS of $0.37 a year ago. Analysts expect CF Industries Holdings, Inc. (NYSE: CF) to post EPS of $4.56 in the September quarter, up from $1.10 a year ago. Only Monsanto Co. (NYSE: MON) is expected to post an EPS loss of -$0.27 for the current quarter, largely due to weakness in sales and margins of its Roundup herbicide.

The demand for fertilizer, particularly potash, reflects an effort among the world’s farmers to increase yields as crop prices remain relatively high. Expectations for crop plantings in the 2012-2013 crop year indicate that global wheat acreage could rise to about 563 million acres in 2012, up 4% from last year, while corn plantings could rise to 94.3 million acres world-wide.

But even if acres planted don’t increase much, farmers everywhere are looking to increase yields. China, for example, plants nearly as many acres of corn as the US, but yields are just half as large. If the country’s farmers could increase their yields, the amount of corn China must import to feed its people would fall. The country has also restricted consumption of corn for industrial purposes like sweeteners and ethanol.

In what could be a boost to seed makers like Monsanto and Syngenta AG (NYSE: SYT), China is also considering allowing the import of genetically modified seed even as it tests a domestically developed strain of corn seed. The country does allow import of genetically modified strains of corn for consumption.

Farmers chasing yield improvements are expected to be the driving force behind fertilizer makers’ growth. Mosaic received an average of $446/metric ton of potash in its first quarter, up from $331 in the same period a year ago. The company guided potash prices for the second quarter at $440-$465/metric ton. For its phosphate products, Mosaic received $576/metric ton in the first quarter, compared with $431 in the same period a year ago. Phosphate prices for the second quarter were guided at $600-$625/metric ton.

While farm prices remain high, fertilizer makers can raise prices and still maintain volume. Mosaic guided shipment levels for potash at 1.7-2.1 million metric tons for the second quarter, compared with shipments of 1.8 million metric tons in the first quarter. Shipments of phosphates are expected to rise to 3.1-3.5 million metric tons in the second quarter, compared with 3.2 million metric tons shipped in the first quarter.

The fertilizer business is strong now and looks to remain that way for the coming year. Market Vectors Agribusiness ETF (NYSE: MOO) is also up by more than 1% at $45.01 and its 52-week range is $43.00 to $57.93.

Paul Ausick

Filed under: Agriculture, Earnings, Food, International Markets Tagged: AGU, CF, MON, MOO, MOS, POT, SYT

Top Analyst Upgrades & Downgrades (ATVI, BEAV, CF, DDS, DNKN, ERTS, LDK, MRGE, NOV, PHM, SODA, TEA, X, WAIR)

Administrator — Tue, 06 Sep 2011 12:15:57 +0000

These are some of this Tuesday’s top analyst upgrades, downgrades, and initiations seen having an impact from Wall Street research calls.

Activision Blizzard, Inc. (NASDAQ: ATVI) Started as Buy at Citigroup.
BE Aerospace Inc. (NASDAQ: BEAV) Started as Buy at BofA/ML.
CF Industries Holdings, Inc. (NYSE: CF) Raised to Outperform as Bull of the Day at Zacks.
Dillard’s Inc. (NYSE: DDS) called Value Stock of the Day at Zacks.
Dunkin’ Brands Group (NASDAQ: DNKN) Started as Equal-Weight at Morgan Stanley; Started as Market Perform at Wells Fargo; Started as Overweight at JPMorgan; Started as Neutral at BofA/ML.
Electronic Arts Inc. (NASDAQ: ERTS) Raised to Hold at Citigroup.
LDK Solar Co., Ltd. (NYSE: LDK) Cut to Sell at Argus.
Merge Healthcare (NASDAQ: MRGE) named as Bear of the Day at Zacks.
National Oilwell Varco (NYSE: NOV) Raised to Buy at Argus.
PulteGroup, Inc. (NYSE: PHM) maintained Buy but removed from Conviction Buy List at Goldman Sachs.
SodaStream International Ltd. (NASDAQ: SODA) Raised to Overweight at JPMorgan.
Teavana Holdings, Inc. (NYSE: TEA) started as Outperform at William Blair; Started as Neutral at BofA/ML.
United States Steel Corp. (NYSE: X) Raised to Buy at Citigroup.
Wesco Aircraft Holdings, Inc. C (NYSE: WAIR) Started as Buy at BofA/ML.

JON C. OGG

Filed under: Analyst Calls Tagged: ATVI, BEAV, CF, DDS, DNKN, ERTS, LDK, MRGE, NOV, PHM, SODA, TEA, WAIR, X

New Uncertainty in Farm Equipment Sales (DE, CNH, AGCO, CAT, CF, POT, DBA, MOO)

Administrator — Wed, 17 Aug 2011 16:35:04 +0000

Farm equipment maker Deere & Co. (NYSE: DE) reported fiscal third quarter EPS of $1.69 this morning, just $0.02 better than analysts’ consensus estimate. Revenue totaled $8.37 billion, significantly better than expectations of $7.5 billion. High crop prices have been driving equipment sales for several quarters now, but rising costs for steel, rubber, and other raw materials are beginning to weigh on the stock.

CNH Global N.V. (NYSE: CNH) reported quarterly earnings a couple of weeks ago and easily topped expectations. AGCO Corp. (NYSE: AGCO) also posted sterling results for its second quarter. Caterpillar Corp. (NYSE: CAT) reported very solid numbers in July — and the stock fell. That’s happening to Deere today as well. All four are down year-to-date.

Because earnings and revenues have been robust on the strength of demand for agricultural and other heavy equipment, it could be that investors have set expectations too high. Nothing less than spectacular will do.

Or it could be that the stocks are fairly valued now and were overbought before. Caterpillar’s forward multiple is 9.63, CNH’s is 8.11, AGCO’s is 8.66, and, based on today’s earnings report, Deere’s is slightly more than 11. Those numbers seem a little low.

What could be going on is that despite the these companies’ own forecasts for continue sales and profits, investors are more concerned with the cost side of things. Deere’s operating margin in its agricultural machinery division fell from nearly 39% in the same period last year to 33% this quarter. Rising raw materials costs are a legitimate concern, especially if other factors could begin to influence sales.

For example, Deere has projected lower sales in South America this year, an area where the company has been very strong. The company forecasts North American sales up 5%-10% on the year, but a report from an agricultural trade group notes that sales of tractors in the US are down slightly year-to-date, and were down -7.4% in the month of July.

Predictions for lower corn yields and a lower-than-expected harvest could also be adding pressure to farm equipment purchases. Even the increased availability of wheat on international markets due to Russia’s decision to resume exports could be stifling sales somewhat.

Fertilizer stocks are performing somewhat better overall due primarily to the fact that adding more fertilizer to increase yields is cheaper and more effective than buying new equipment. Shares of CF Industries Holdings Inc. (NYSE: CF) have gained about 25% year-to-date, and shares in Potash Corp. of Saskatchewan are up about 8% in the same period.

Deere’s shares are down about -1% just after noon today, at $74.44, in a 52-week range of $60.45-$99.80. Volume has already surpassed the daily average. Caterpillar stock is down about -1.35%, at $88.14, in a 52-week range of $63.34-$116.55. Shares of CNH are down more than -2%, at $30.58, in a 52-week range of $27.01-$54.45, and AGCO shares are down more than -3%, at $39.23, in a 52-week range of $32.36-$59.81.

Shares of PowerShares Agriculture Fund are up about 0.7%, at $33.09, in a 52-week range of $25.63-$35.58. The Market Vectors Agribusiness ETF (NYSE: MOO) is up about 0.25%, at $50.15, in a 52-week range of $42.35-$57.93.

Paul Ausick

Filed under: Agriculture, Earnings, Infrastructure, International Markets Tagged: AGCO, CAT, CF, CNH, DBA, DE, MOO, POT