Higher prices for fertilizer means more earnings for producers. So with RBC Capital Markets’ potash price forecast increase comes higher price targets for shares of Agrium Inc. (AGU) and Potash Corp. (POT).
The firm expects Potash Corp.’s average realized price per tonne in 2008 will come in at US$208, compared to previous estimates of US$190.
Analyst Fai Lee maintained an “outperform” rating on the shares and hiked his price target to US$88 from US$75, which represents upside of nearly 20%.
For Agrium, his target moves up US$1 to US$43, while maintaining a “sector perform” rating.
Mr. Lee thinks potash prices could rise US$30 per tonne for China in 2008 and US$10 for the rest of the world.
AGU and POT 1-yr chart: