Bernstein Explains Bullish Call On Mosaic
Bernstein named Mosaic Co (NYSE: MOS) as its top pick for 2018, and laid out its investment case.
The Analyst
Bernstein analyst Jonas Oxgaard reiterated his Outperform rating on shares and increased his price target from $33 to $44, suggesting 60 percent upside from current levels.
The upward revision to the price target was attributed to the adjustment made to taxes, lower dilution value from Vale and stronger phosphate prices.
The Thesis
Fertilizer prices will be strong in 2018, benefiting Mosaic, a maker of potash and phosphate, Oxgaard said in a Tuesday note. The analyst expects further strength in the already above-consensus prices for both commodities.
Vale SA (ADR) (NYSE: VALE) assets the company acquired will contribute about $200 million recurring EBITDA in 2018, after being impacted by a series of one-time impacts and trough commodity prices, Oxgaard said.
Bernstein doesn't view Mosaic's debt burden as a cause for concern, as the company has a plan chalked out to reduce debt. The credit revolver facility eliminated any short-term liquidity concerns, the firm said.
Oxgaard said Mosaic seems to be regaining investor trust, with the third quarter results going a long way to set right its missteps in the first and second quarters. That said, there is more work to be done.
The Price Action
Mosaic shares are up over 27 percent over the past year.
At time of writing, shares were up 2.3 percent to $27.27.
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Latest Ratings for MOS
Nov 2017 | Citigroup | Maintains | Neutral | |
Nov 2017 | BMO Capital | Maintains | Market Perform | |
Nov 2017 | Scotiabank | Upgrades | Sector Underperform | Sector Perform |
View More Analyst Ratings for MOS
View the Latest Analyst Ratings
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