Goldman Sachs reported on Wednesday that they are advising investors to buy crop nutrient producer, Mosaic Co(MOS) with any declines which may occur as a result of the next earnings report.
The firm has suggested to investors to take any potential price declines as an opportunity to buy shares of the company. The second quarter earnings report, which will be announced on January 4, may cause the stock to temporarily decline.
An analyst from the firm commented, “we would be buyers of any weakness around FY2Q results, as we believe challenging near-term P&K market fundamentals are well understood by the street and capital allocation catalysts remain visible in mid-2013.”
The analyst also noted, “we expect investors to be keenly focused on MOS’s outlook for CY2013 global potash shipments and commentary on new China/India contracts. MOS is likely to lower its 2013 K shipment forecast (58-60mmt) to be more inline with peers (56-58mmt). We expect new China/India contracts to be signed in CY1Q and to set a new floor for global pricing at $430-440/mt. We also expect management to draw attention to the significant margin opportunity in Phosphates as product prices appreciate and ammonia prices come off peak.”
Goldman Sachs currently has a “Buy” rating on MOS with a price target of $68. This price target suggests a 17% increase from the stock’s current price of $56.27.
Mosaic shares were up 70 cents, or 1.26% during Wednesday morning trading. The stock is up 11.7% YTD.
The Bottom Line
Shares of Mosaic Co. (MOS) have a 1.80% dividend yield, based on last night’s closing stock price of $55.61. The stock has technical support in the $50-$52 price area. If the shares can firm up, we see overhead resistance around the $58-$60 price levels.
Mosaic Co(MOS) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.2 out of 5 stars.
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