- A Citigroup analyst upgraded fertilizer makers Mosaic Co. and Potash Corp. of Saskatchewan Inc. late Monday, expecting higher contract potash prices to China and India to benefit both fertilizer companies.
- Analyst Brian Yu upgraded both companies to "Buy" from "Hold" based on "a more bullish" outcome from ongoing potash contract negotiations with China. Potash is a fertilizer made from wood ashes used mostly in agriculture to fertilize crops and other plants. Demand has been strong because of factors that include growing demand for ethanol.
- Yu said contract potash prices to China and India may rise by $150 per metric ton in 2008, versus prior expectations of around $100 per metric ton.
- "We do not expect China to be able to increase domestic potash production before 2010, thus it remains 70 percent to 80 percent reliant on imports to satisfy the domestic demand," Yu wrote in a client note.
- For Mosaic, Yu hiked his share price target to $121 from $93, representing upside of nearly 23 percent to Monday's closing price of $98.45. Yu raised his price target to $178 from $141 for Potash, suggesting upside of 23 percent from Monday's closing share price of $145.
Long both names in fund and in personal account
2 comments:
Good call on these partial sales. I missed it this morning, and wished I had sold some.
Yes, these are among my favorite names and one day I can just sit and hold them, but not in this environment. I still want them to be very heavily weighted in the fund in case the market just starts a long run, but until proven otherwise I will assume all runs are to be sold in a bear market. So I cut them back, and hope to buy back cheaper. They are still large weightings.
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