Charles Neivert, a managing director at Dahlman Rose & Co., recently raised his recommendation on the fertilizer sector, including Plymouth-based Mosaic Co.
Neivert raised his recommendations on Mosaic, Agrium Inc., and Rentech Nitrogen Partners from hold to buy. Potash Corp. of Saskatchewan Inc. and CF Industries Holdings Inc. were upgraded from sell to buy.
In a recent research note Neivert wrote: "We believe that fertilizer shares largely reflect the valuation eroding impact of a large crop. Given that backdrop, we see only two possible outcomes, both of which point to higher share prices. As such we are raising our outlook on the sector and equity ratings of the companies in our ag universe." Neivert believes the market already has priced into the shares of those stocks the impact of a large crop this fall, which would limit the industry's downside potential. And any adverse weather events that harm crop yields would likely result in more demand for fertilizer.
HUTCHINSON TECH WOES
Late Wednesday, Hutchinson Technology issued a news release saying it had shipped about 100 million suspension assemblies in the third quarter -- short of the company's previous guidance of 105 million to 115 million. The stock market responded harshly on Thursday, driving shares down 12 percent, to $1.50.
Hutchinson Technology has been seen as a leading indicator of activity in the hard-disk drive (HDD) market. But the company's recent performance has analysts questioning that link. Analyst Aaron Rakers at Stifel Nicolaus wrote that Hutchinson's announcement could be used as an indicator, but cautioned that "it has become harder to use Hutchinson as a proxy on overall HDD trends."
PATRICK KENNEDY
