mosaic (moss) and fellow fertilizer maker Neutrino (NT) reported mixed results for the first quarter. But while Mosaic sees continued supply chain problems in the second quarter, Nutrien sharply raised its full-year earnings forecast. MOS stock fell slightly early Tuesday, while NTR stock rose modestly, both from key levels.
Nitrogen Fertilizer Producer CF . Industries (CF) has earnings due late on Wednesday.
All four stocks are part of Agrochemical Industries Group Which ranks second out of 197 IBD industry groups, based on price performance and momentum. The group was already in a massive race when the Russian invasion of Ukraine sparked what looked like a powerful rally.
A combination of forces contributed to the rise in fertilizer prices, including restrictions on exports from Russia, Belarus, and Ukraine. Higher prices for natural gas, feedstock for nitrogen-based fertilizers, and US tariffs on supplies from Morocco have also contributed.
Now fertilizer stocks are down about 15%-20% from their peak and are looking for support in the 50 day moving average. A strong breakout will provide a sell signal. But the bounce may provide new buying opportunities.
So far, a number of analysts are still sticking with the group as they see the potential for a prolonged earnings boom.
On Monday, Mizuho analyst Christopher Parkinson delivered big price target increases for MOS (to 89 from 59), NTR (124 from 94), CF (120 from 81), and FMC (155 from 136). Parkinson’s appeared to be a “multi-year bullish call,” but maintained neutral ratings as it looks for a more attractive entry.
On March 7, when a CF ad appeared with the name IBD stock todayCharles Nefert, analyst Piper Sandler explained his bullish outlook.
He said that despite the rare streak of five big crop years, global food insecurity is on the rise. “We’re running like hell to stay where we are.”
But he says the inevitability of poor crop yields and low stocks suggests that high corn prices are here to stay, even after the conflict between Russia and Ukraine subsides.
Estimates: Analysts expected earnings per share of Mosaic to rise more than 400% to $2.40. Revenue rose 78% to $4.08 billion.
consequences: Mosaic’s earnings jumped 323% to $2.41 per share. Revenue rose 71% to $3.92 billion, but missed expectations amid lower shipment volumes.
Early Tuesday, MOS stock was down 1.7% to 61.34, pulling back from the 50-day moving average after closing below that key level in the previous two sessions. The company did not provide specific guidance on EPS but said that supply chain issues were “just beginning to recede”.
However, Mosaic said it expects phosphate sales of between 1.9 and 2.1 million tons in the second quarter, versus 1.7 million in the first quarter. Potash sales should rise to 2.4 – 2.6 million tons from 1.8 million in the first quarter.
Estimates: Nutrien’s earnings jumped 850% to $2.76 per share, with revenue up 64% to $7.62 billion.
consequences: Nutrien’s earnings rose 831% to $2.70 per share, with revenue up 64% to $7.66 billion.
prospects: Nutrien raised full-year EPS guidance to $16.20-$18.70, up from $10.20 to $11.80 prior guidance and just over $15 consensus. He cited higher selling prices, higher potash volumes, higher gross margins for retail crop nutrients and crop protection products. EPS guidance also drives at least $2 billion in NTR stock buybacks.
NTR stock rose 1.4% to 100.62 early Tuesday, moving away from the 50-day streak. Shares rose 1% to 99.21 on Monday.
Estimates: FMC was expected to report earnings per share of $1.71, an increase of 12%, on revenue growth of 7.5% to $1.29 billion.
consequences: The stock price jumped 23% to $1.88. Revenue grew 13% to $1.35 billion.
FMC stuck to its full-year revenue growth guideline in the middle of its $5.25-$5.55 billion range. However, FMC trimmed its EPS steering range to $6.70-$8, down 10 cents at both ends.
The company cited cost inflation, supply disruptions, a foreign currency adjustment, and its decision to halt operations in Russia.
FMC stock fell 5% to 125. On Monday, the shares bounced off the support at the 50-day line.
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