Ahead of the Bell: Mosaic

Citi analyst downgrades Mosaic to 'Neutral' citing buyback delays, uncertain demand

Associated Press

NEW YORK (AP) -- Delays in a stock buy-back program at Mosaic and doubts about fertilizer demand brought about a downgrade Wednesday from Citigroup.

The fertilizer maker said after the market closed Tuesday that it will not be able to buy back shares of its Class A restricted stock from trusts controlled by Cargill Inc. until at least November.

The trusts have held 129 million of the shares since Mosaic's split from Cargill in May 2011. Mosaic said it has been trying to amend the agreement between the two, to push back the date two when restrictions expire, which is Nov. 26. The company was not successful in those negotiations.

Mosaic said it won't be able to buyback the stock until after that date.

Citi's P.J. Juvekar called the news disappointing, saying that investors were hoping for a stock buyback and resulting increase in the company's share price with so much uncertainty right now about the demand for phosphates and potash.

Juvekar said that near-term demand for phosphates and potash appears more challenged given recent weakening of the Indian rupee, which has fallen about 10 percent over the past six weeks, and reports of high inventories in the country.

"Without the buyback as a catalyst we think Mosaic shares could trade sideways," Juvekar wrote.

Citi downgraded Mosaic to "Neutral" from "Buy."

Shares of Mosaic Co., based in Plymouth, Minn., fell 75 cents to $55.16 in premarket trading.

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