Potash and Agrium Targets Slashed - UBS Analyst

After slashing its price targets on Potash Corp. (POT) and Agrium Inc. (AGU) dramatically just last week, UBS is cutting again as a result of the weaker economic outlook.

Analyst Brian MacArthur got the Street’s attention when he cut his forecast for Potash shares from $308 to $180 and Agrium from $135 to $80 on Oct. 6 as a result of lower fertilizer prices. Now, those targets have moved down again to $165 and $72, respectively.

UBS cut its 2009-2011 average price forecasts for fertilizers such as potash, diammonium phosphate [DAP] and urea by 19%, 45% and 36%, respectively.

As a result, its earnings per share [EPS] forecasts for Potash fall to $12.01, $17.93 and $18.08 for 2008 through 2010. For Agrium, UBS forecasts EPS will come in at $8.50, $9.73 and $9.03.

Comments

[User 226404:]

"Analyst Brian MacArthur got the Street’s attention when he cut his forecast for Potash shares from $308 to $180 and Agrium from $135 to $80 on Oct. 6 as a result of lower fertilizer prices. Now, those targets have moved down again to $165 and $72, respectively."

He missed $308 big; how about $165?

2008 Oct 19 12:01 PM

[MarcoTrade:]

The more I understand the market the more I realize that analysts are the last category to pay attention to. They play with price targets all the time.

Pot from over $300-400 to $165 in one month?!? Based on what?
Market perception? Crystal ball? Rumors? They contribute to extreme volatility in stock prices and they don't have the right to do so. Unfortunately many retail investors listen to them. If POT posts strong results in 10 days then the stock price will jump and they will review again their estimates... what a nonsense..

2008 Oct 19 01:45 PM

[dwlima:]

Analysts change estimates to promote stock trading and have an excuse to have an office. Anyone that knows anything about DCF or other valuation techniques knows that you could change estimates each day based on the the way the wind is blowing. Don't let Wall Street keep sucking you in and then out....do your own research if you know how or buy ETFs if you don't.

DWLima

2008 Oct 19 08:47 PM

[vehafwayz:]

Is anybody listening to analysts anymore? They just flap their lips and spew out whatever they like. If you back-check them, they're wrong over 90% of the time. They remind me of weather forecasters and their "mix of sun and cloud." How can you miss? POTASH CORP. has third-quarter earnings on Thu 23 Oct 08, so I think I'll just wait for that. Yahoo! Finance shows POT's next earnings date as July 24 2008, but I'm sure that's either an oversight or they have analysts keeping track of these things now.

2008 Oct 19 09:47 PM

[John-Galt:]

A price target for WHEN? Having a price without a date is not a target at all, more of a philosophy.

2008 Oct 20 08:05 AM

[mag:]

analysts are totally useless (I call them parasites...as they do not produce ANYHTING) ...plus they are backward looking...if the world economies turn around, we will have more inflation, higher prices for fertilizer based on that and also based on increased demand...right now is the time to buy these stocks, when all parasites downgrade them...and sell them when they say buy....

2008 Oct 20 08:12 AM

[colliers:]

hi! I´ve potash 240$, crazy!! i know, but do you think next to 5 years I could see potash near 240$.

thanks

2008 Oct 20 01:09 PM

[colliers:]

hi! I´ve potash 240$, crazy!! i know, but do you think next to 5 years I could see potash near 240$.

thanks

2008 Oct 20 01:10 PM

[vehafwayz:]

To: John Galt ("more of a philosophy")

That's funny, John. Thanks.

2008 Oct 20 05:18 PM

[The Farmer:]

POT's earnings will most likely be good on the 23 of Oct. Future prices could come down a little but prices will most likely stay relatively high due to suppy and demand.

2008 Oct 21 01:13 AM

[peachberry_tea:]

i for one don't blame the analysts for this one
it's easy to unload on them when they're way off
but i think anyone who has actually tried to valuate POT or AGU will realize that the current valuation is just ridulously low.. P/E of 5 for AGU?
yeah most ppl could see the commodity bubble bursting, but i didn't see that kind of P/E coming either
i'm pretty sure i would've laughed if someone told me AGU/POT were gonna have forward PEs of less than 8 way back in June

2008 Oct 21 02:00 AM

[jeager:]

If one were to follow these jokers then chances are one would lose till his pants down. These analysts always have vested interest in their analysis. Just ignore them will make you a better investor.

2008 Oct 21 02:38 AM

[einstein p ...:]

The UBS price target is "slashed" to 165 and POT is currently selling for 75 a share. Assuming the time frame is 12 months, what's the problem?

Most likely, it's a conservative estimate --- which is more likely to be revised up when the stock hits 180 or if CARGILL decides to buy the remaining stake in MOS at a substantial premium.

2008 Oct 21 02:23 PM

[einstein p ...:]

POT at 66 --- now there is 100 points to the upside.

The funny thing is that I read that POT and MOS were "holding" their current prices, not raising them to 1000 a tonne, due to the current environment. Didn't POT raise full year guidance last quarter when they crushed their earnings ---- which caused the stock to nosedive?

Does the guy from UBS still have a buy rating on POT or is 100 points to the upside not enough in this environment without a dividend?

2008 Oct 22 01:22 PM