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Nutrien shares upgraded to Outperform by Raymond James on risk-reward

EditorNatashya Angelica
Published 12/03/2024, 10:33 AM
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Raymond (NS:RYMD) James analyst upgraded Nutrien (NYSE: NYSE:NTR) shares from Market Perform to Outperform with a price target of $60.00 (from $58.00). The revision in the stock's rating also reflects the recent drop in Nutrien's share price, which has created an attractive risk-reward scenario for investors at current levels.

The new price target suggests a potential upside from the stock's recent trading price. Nutrien's performance and the changes in market conditions will continue to be closely monitored by investors following this rating change.

The company's progress in streamlining its operations and the overall health of the potash market will likely play significant roles in Nutrien's stock performance going forward. Despite trading at a relatively high P/E ratio of 32.74, the company's low price volatility and stable financial metrics suggest a balanced investment opportunity.

Despite trading at a relatively high P/E ratio of 32.74, the company's low price volatility and stable financial metrics suggest a balanced investment opportunity.

The analyst at Raymond James highlighted several factors contributing to the more optimistic outlook on Nutrien. A notable recovery has been observed in the global potash markets, particularly with spot prices in Southeast Asia and Brazil showing significant increases from their previous lows.

The analyst anticipates further seasonal momentum to bolster this trend. While InvestingPro data shows analysts expect a sales decline this year, the company maintains a strong free cash flow yield and has demonstrated consistent dividend growth for seven consecutive years.

Moreover, management's recent initiatives to improve operational efficiency are reportedly gaining traction. These efforts are part of Nutrien’s broader strategy to optimize its business processes and cost structure.

In other recent news, Nutrien Ltd. reported significant progress in its Q3 2024 earnings call. Despite lower benchmark prices for potash and a decrease in nitrogen adjusted EBITDA, the company announced an increase in upstream sales volumes and adjusted EBITDA for the first nine months of 2024.

Nutrien aims to achieve $200 million in annual operational efficiencies by 2025, and its adjusted EBITDA reached $4.3 billion, with retail adjusted EBITDA up 10% year-over-year.

Piper Sandler maintained its Underweight rating on Nutrien, expressing a cautious stance towards the agricultural economy and the potential impact on fertilizer prices. BMO Capital Markets, however, maintained an Outperform rating on Nutrien, despite reducing the stock's price target to $70.00 from the previous target of $75.00.

Nutrien's share buyback program was resumed, signaling confidence in the company's financial health. The company plans to allocate $2.2 billion to $2.3 billion in capital expenditures for 2024 and has repurchased 1.5 million shares for approximately $75 million since September 2023. These are among the recent developments that investors should take note of.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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