Mosiac Braces For Earnings (MOS, POT, MOO)

After today’s close, we’ll get to see earnings out of Mosaic Co. (NYSE: MOS).  The fertilizer and potash giant is expected to post $1.64 EPS on $2.85 Billion in revenues.

Estimates for next quarter are $2.85 EPS on $3.95 Billion in revenues.   Today is also the report for its Fiscal-2008, so if the company offers guidance for Fiscal May-2009 is $12.83 EPS vs. $17.64 Billion in revenues.

While the market cap has grown to almost $55 Billion as of today aftera 1% gain to $123.40, this stock has actually lost one-quarter of itsvalue since its peak just over one month ago.  Its 52-week tradingrange is $32.50 to $163.25.  So we still have a near-300% gainer sinceyear ago levels.

Analysts have an average price target of $200.00 or so, which impliesgains of more than 50% ahead if those calls end up accurate.  With manytraders betting that commodity inflation trade has peaked, that is lessand less of a certainty as it seemed in the first half of 2008 aseveryone wanted to own this and others in the fertilizer and potashsector.

Options traders appear to have dug in expecting a large move.  It looks like options tradersare braced for a move of up to about $10.00 in either direction.

The charts show a very mixed reading.  Non-event trading bands putsupport approximately around $118 and put resistance up around$127.00.  But that is just normal trading bands and the moving averagesare much farther outside of that range.  We have the 200-day movingaverage recorded as $105.10 and the 50-day moving average recorded as$135.90.

Despite the pullback this stock is up massively over the last year.  Itseems highly unlikely that traders would greet a "meet and reaffirm"quarter with any major excitement. Its short interest of 2.689 millionshares on last look is actually lower than before and notrepresentative of a stock that short sellers have been all over.

The two most obvious plays to watch for a reaction in conjunction withtoday’s earnings are Potash Corp. of Saskatchewan (NYSE: POT) and theETF called the Market Vectors Agribusiness ETF (AMEX: MOO).

Jon C. Ogg
July 28, 2008