Nutrien’s Trading Levels Too Attractive to Ignore
This Thursday Nutrien (NYSE: ) had its investor Day, during which the company revealed plans for expansions in its nitrogen and potash production. BofA’s Daniel Lungo informed investors that they still have questions, but Nutrien is attractive.
Nutrien is a fertilizer firm that plans to boost potash production by approximately 3,000,000 tons annum (mmta), and nitrogen production by 500k tonnes per year before the end 2025. Additionally, Nutrien announced an additional $2b of share repurchases by 2022.
Lungo wrote that while the firm has some concerns regarding the liquidity of NTRCN’s notes, they “believe that market fundamentals and trading levels are too attractive to ignore” and therefore maintained an Overweight rating on the stock.
Christopher Parkinson, Mizuho’s analyst, said that four factors were important to emphasize following an investor day.
They include the positioning of the company to increase capacity to 18mmts by ’25 and several updates to long term EBITDA potential including a $9.2B mid-cycle scenario. A building focus on low CO2 NH3 plants. There is also ample cash flow option.
However, the analyst concluded: “As much as we appreciate the Retail updates (core to bull thesis), there doesn’t appear to be much ‘new’ (product differentiation + M&A).”
Mizuho has maintained a Neutral rating, and an $128 price target for Nutrien.