Investors Brace For Potash Earnings (POT, MOO)

Thursday morning, we’ll get to see earnings out of Potash Corp. of Saskatchewan, Inc. (NYSE: POT). The estimates for the potash producer from First Call are $1.52 EPS on $1.67 billion in revenues.  Next quarter estimates are $2.27 EPS on $2.34 billion in revenues. Estimates for fiscal Dec-2008 are $8.62 EPS on $8.29 billion in revenues.

Analysts have an average price target north of $200.00, and the 52-week trading range is $58.87 to $214.84.  Shares closed down $10.71 today at $204.12.  With all the upgrades seen in late 2007 to early 2008, it’s either time for analysts to increase targets or make their "valuation" comments now that shares are above many price targets even though the ratings are still very positive.

These potash and fertilizer stocks have run up with such fervor that investors will not accept any "weak economy" comments or any in-line guidance, particularly after the recent huge price hikes were announced to China.

Its conference call will not be until 1:00 PM EST Thursday, which gives it little competition among investors since most post-earnings conference calls will be completed by then.

We’ve already seen competitor earnings, but this is one of the key stocks out of the potash group.  The Market Vectors Global Agribusiness ETF (AMEX: MOO) is what we’ll be watching most closely for the secondary effect.

We recently featured a hidden asset play that may actually be its own company after a spin-off IPO in the fertilizer sector to subscribers of our Special Situation Investing Newsletter as a bonus issue.  It isn’t a potash play as the company has a low-cost advantage for nitrogen fertilizer products, but anything tied to fertilizer in the U.S. has seen shares rocket over the last 12 months. 

Stay tuned as this has been the hottest sector around. 

Jon C. Ogg
April 23, 2008