BofA Securities downgraded CF Industries (NYSE: CF) from Neutral to Underperform, setting a price target of $83.00. This change follows the observation of strong ex-US urea prices and global ammonia prices due to supply disruptions.
Despite recent price increases, the analyst anticipates a decline due to several factors. India’s high urea inventories may lead to reduced imports, and falling Chinese prices could increase exports. Furthermore, lower nitrogen demand in the U.S. this fall is expected, with poor farmer economics affecting both U.S. and global urea and ammonia demand.
The analyst also notes that normalized supply from Egypt and Trinidad, along with new sources from the Gulf Coast, could end the price rally for nitrogen products. These insights prompted the downgrade of CF Industries.
In contrast, CF Industries received positive feedback after a strong Q2. RBC Capital raised its price target to $95.00, and BMO Capital increased theirs from $95 to $100, citing the company’s strong operational performance and clean ammonia initiatives.
For Q2 2024, CF Industries reported over $750 million in adjusted EBITDA, contributing to $1.2 billion for the first half of the year. Their net earnings for the same period were around $614 million, with a 99% utilization rate at their ammonia plants and progress in decarbonization projects.
InvestingPro data reveals that despite BofA’s downgrade, CF Industries has a P/E ratio of 15.28 and a 2.35% dividend yield with a 25% growth over the last year, demonstrating strong returns to shareholders. The company has raised dividends for the past 3 years and maintained payments for 20 years, contributing to stability even in uncertain markets.
CF Industries is currently near its 52-week high, with a 16.94% return over the last three months. For more insights, InvestingPro provides additional tips for understanding the company’s financial situation and market performance.
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