NEW YORK (AP) -- Drought conditions are hammering agriculture in a swath of the U.S., but an analyst says it could be good for business at Lindsay Corp., which makes irrigation systems.
Janney Capital Markets analyst Ryan M. Connors said Tuesday that severe drought like that affecting the Midwest could lead some farmers who have been undecided to buy a center-pivot irrigation system.
Maybe not an immediate boost though — Connors said company management believes that a spike in sales for next year is unlikely. He said the farmers who could benefit most from an irrigation system might not be financially able to buy one, and that access to water supplies could be limited in a severe drought.
Moderate drought would be good for the Omaha, Neb.-based company, he said, but the effect of a severe drought would be less certain.
Lindsay shares are up nearly 30 percent since mid-June. On Tuesday, they rose 34 cents to close at $70.90 and have ranged from $46.03 to $74.40 in the past 52 weeks.
Janney rates the stock "Neutral." Connors said mechanized irrigation will grow over the long run, but the recent stock-price rally "has been driven by over-exuberance regarding the near-term impact of the drought" on sales of irrigation systems. The analyst said he would be cautious in buying the shares at current prices.