Finally.  Fundamentals are catching up with share prices.

Potash Corp. said that earnings are now expected to be $1.30 to $1.50 EPS versus a prior guidance of $0.70 to $1.00 EPS which was provided on January 28, 2010. The reason for the higher guidance  was noted as being “a sharp rebound in potash demand that is expected to drive a record quarter for North American sales volumes and strong offshore shipments, as well as higher-than-expected margins in nitrogen and phosphate.”  Also noted was, “Strong farmer returns, a depleted distributor pipeline and the agronomic need to replace soil nutrients have kick-started a potash rebound from 2009 lows.”

CF Industries (NYSE: CF) has confirmed that it and Terra Industries (NYSE: TRA) have entered into a definitive merger agreement. Terra holders will receive $37.15 in cash and 0.0953 of a share of CF Industries common stock.  The boards of directors of both companies have approved the $4.7 billion combination, and Yara of Norway has backed away from its prior offer.

How this plays out will be interesting.  Terra has a deal from Yara in Norway valued at about $41.10 per share.  CF withdrew its bid under the gumption that it believed Terra would not sell at all but now it is trumping Yara with a better bid.  What may be more interesting is that break-up fees or termination fees could come into play here.

This is likely to put a focus on other fertilizer and potash companies today despite poor earnings data from the group.  We have yet to see any reaction at all in the Market Vectors Agribusiness ETF (NYSE: MOO) as a result of the deal.  In that ETF, CF and Terra make up only about 3.2% of that ETF, while Yara is about 4% of the ETF alone.

CF is down by 6.8% at $100.20 on almost 450,000 shares and Terra is up 12.6% at $46.40 on 9.3 million shares.  For Terra, this marks a new 52-week high at anything above $43.13.

JON C. OGG

Adobe Systems (NASDAQ: ADBE) Started as Buy at Citigroup.
Check Point Software (NASDAQ: CHKP) Started as Buy at Citigroup.
Citrix Systems (NASDAQ: CTXS) Started as Sell at Citigroup.
Corporate Office Properties (NYSE: OFC) Raised to Top Pick at RBC.
Dreamworks Animation (NYSE: DWA) Raised to Overweight at Thomas Weisel.
Mattel Inc. (NYSE: MAT) Raised to Buy at UBS.
Microsoft (NASDAQ: MSFT) Started as Buy at Citigroup.
SanDisk Corp. (NASDAQ: SNDK) Raised to Overweight at Morgan Stanley.
Terra Industries (NYSE: TRA) Cut to Neutral at JPMorgan.
VMware (NYSE: VMW) Started as Hold at Citigroup.
VeriSign (NASDAQ: VRSN) Started as Buy at Citigroup.
Whole Foods (NASDAQ: WFMI) Raised to Overweight at JPMorgan.

You are invited to join our free daily email distribution list to hear about top analyst upgrades and downgrades, IPOs and secondary offerings, ongoing day trader and options trader alerts, stock and market rumors, Buffett and guru investor news, M&A and more.

JON C. OGG
FEBRUARY 17, 2010

Advance Micro Devices (NYSE: AMD) rose over 9.5% to a yearly high of $8.61 after the personal computer maker was upgraded to “outperform” by Stacy Rasgon of Sanford C. Bernstein & Co.

AsiaInfo Holdings Inc. (NASDAQ: ASIA) rose close to 26% to a yearly high of $31.60 after the Chinese developer of software for phone company announced that it would be merging with Linkage Technologies International Holdings Ltd (NYSE: BOSS), creating a company valued at $1.8 billion.

Terra Industries (NYSE: TRA) rose over 9% to a yearly high of $42.70 after CF Industries (NYSE: CF) raised its buy out offer for the producer of nitrogen fertilizer to $4.58 billion.

Garrett W. McIntyre

American International Group, Inc. (NYSE: AIG) is down only about 2% after reports that the company could find itself leaderless again.

A123 Systems, Inc. (NASDAQ: AONE) is trading down 3% after earnings and concerns over a partnership.

MBIA Inc. (NYSE: MBI) is trading up over 3% this morning after getting crushed yesterday, M.J. Whitman’s Third Avenue took a stake.

Palm Inc. (NASDAQ: PALM) is running over 3% on an analyst call.

Sigma Designs, Inc. (NASDAQ: SIGM) is down 8% on a downgrade.

Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN) is trading up 10% after Sanofi-Aventis expanded its antibody pact substantially.

We have many options on watch as well:

• Cadence Pharmaceutical Inc. (NASDAQ: CADX) is one to watch with a huge binary volatility trade ahead of the 11/13 PDUFA date for Acetavance as a treatment for acute pain.
• There was some interesting options trading seen yesterday in the trifecta fertilizer merger war via Terra Industries Inc. (NYSE: TRA), CF Industries (NYSE: CF), and Agrium (NYSE: AGU).
• Brocade Communications Systems, Inc. (NASDAQ: BRCD) gave a stock and option alert yesterday, but it went even more active in options with the NOV09 $9 CALLS seeing 24,450 contracts and the NOV09 $10 CALLS seeing 17,432 contracts.

You can join our open email distribution list which goes out several times per week to be notified of key merger news, key analyst calls, top early morning day trader alerts, along with news of IPO’s, key offerings, guru investor data on Buffett and others, mergers, and more.

JON C. OGG

Fertilizer maker CF Industries Holdings, Inc. (NYSE:CF) said it has purchased 7% of the shares of competitor Terra Industries Inc. (NYSE:TRA) on the open market. CF has also renewed its offer to purchase the remaining shares of Terra, this time for about $4 billion. The latest offer values Terra at about $40/share and includes a $7.50/share adjustment to pay for a special dividend that Terra proposes to issue to its shareholders.

CF Industries is itself trying to resist a buyout from Canadian fertilizer maker Agrium Inc. (NYSE:AGU), which last week extended its exchange offer for CF until October 22nd. That offer includes $40/share in cash plus one share of Agrium stock for each share of CF stock.

Fertilizer shares have been climbing slowly since last December, but with the exception of Terra, share prices are either flat or down over the last 52 weeks. Terra’s shares are moving up, more than likely on the continued efforts of CF to buy the company.

Terra’s shares are down about 1% in early trading to $35.50, near the company’s 52-week high of $37.25. CF shares are up about half a percent, to $86.55 and Agrium shares are up about 1.5% to $50.47.

Paul Ausick

Aeterna Zentaris (AEZS) Cut to Sector Perform at RBC; cut at Canaccord and at Desjardins also.
American Express (AXP) Raised to Outperform at KBW.
Arthrocare (ARTC) Raised to Buy at Canaccord.
Brocade (BRCD) Raised to Strong Buy at S&P.
Corning (GLW) Raised to Outperform at Oppenheimer.
Crucell (CRXL) Cut to Sell at ING.
Goldman Sachs (GS) Raised to Buy at Pali.
International Game Tech (IGT) Raised to Overweight at JPMorgan.
Motorola (MOT) Started as Buy at Canaccord.
Terra Industries (TRA) Started as Overweight at JPMorgan.

JON C. OGG
AUGUST 18, 2009

The USDA’s July estimates showed that farmers across the country had planted more acres of corn and soybeans than what was expected.  And prices were revised lower on all fronts.  Fewer acres needed next year translates to lower fertilizer demand, and lower prices.  It seems farmers are able to push off buying fertilizer and potash as a result.

Citigroup noted that major purchase prices were lower in India as well.  That was said to be as much as 25% lower, although the specific data is not gospel.  For whatever it is worth, it seems that the lower price is something that should have been expected based upon recent warnings.  The overall trend in lower oil and commodity prices is another factor that makes this somewhat of a given.  It also seems that price negotiation in India would be repeated by China.

• Potash Corp. of Saskatchewan, Inc. (NYSE: POT) is off by over 8% at $85.56.
• Mosaic Co. (NYSE: MOS) is down 4% at $41.06.
• Agrium Inc. (NYSE: AGU) is down 4.3% at $36.24.
• CF Industries Holdings, Inc. (NYSE: CF) is down 4.5% at $68.68.
• Terra Industries Inc. (NYSE: TRA) is only down 0.5% at $24.95.
• Terra Nitrogen Company, L.P. (NYSE: TNH) is down 3% at $96.38.
• Intrepid Potash, Inc. (NYSE: IPI) is off by 8% at $23,37.
• Market Vectors Agribusiness ETF (NYSE: MOO) is down 2% at $32.39.

Jon C. Ogg
July 10, 2009

Agrium Inc. (NYSE: AGU) is indicated down about 4% around $39.50.

CF Industries Holdings, Inc. (NYSE: CF) is indicated down around 4% around the $73.00 mark.

Terra Industries Inc. (NYSE: TRA) is indicated down about 2% to 3% around $25.20.

Terra Nitrogen Company, L.P. (NYSE: TNH) is still high priced and indications are not yet in.

Intrepid Potash, Inc. (NYSE: IPI) is indicated down over 4% after a $27.32 close but no real indications have been seen.

Our single largest issue here with the severity of the shortfall is that it sounds almost exactly the same as the K+S warning we covered before.  The issue is that this was 8 days before the Thursday warnings from Potash Corp.

The question to ask yourself is just how much management knew about things looking very soft.  We aren’t going to blindly accuse anyone of not living up to their duties, but the reality is that if this was a minor warning the questions might not be brought up.  But a warning of this size doesn’t exactly just get turned in on a slipped piece of paper on to the CEO’s desk while he is driving home and isn’t looking.  Potash Corp. had traded in a range of $110 to almost $120 from late May to early June.  It looks like shares will be opening in the mid-$80′s this morning.

Fertilizer and potash come and go as the “sector of choice” for investors.  Sometimes it’s hot, and sometimes not.  For now, fertilizers are back to smelling like you know what.

Our advice to management in the potash and fertilizer segment is simple.  If you know your quarter is going to smell like raw fertilizer, you better go ahead and come clean now.  Otherwise the credibility issues will come more frequently and the attorneys filing class action suits will have more ground to stand on with accusations that you had more than one instance to have assumed there were problems.

Jon C. Ogg
June 26, 2009

So far this morning, Agrium shares are down nearly 3%, within pennies of the stock’s 52-week low of $38.86. Same story with CF — down more than 3% to $67.62, just $0.07 above the 52-week low. And Terra is taking collateral damage, down to $27.52, just $0.19 above its 52-week low.

Paul Ausick
April 20, 2009