So much for that pricing power and planned recovery of potash and fertilizer prices. Sort of… A report, a confusing report, from Goldman Sachs this morning is panning the estimates for the two key fertilizer makers Potash Corp. of Saskatchewan (NYSE: POT) and for The Mosaic Company (NYSE: MOS). The ratings change is actually on the heels of dividend news and also on after a court case settlement. A call from J.P. Morgan on Mosaic is adding some fuel to selling fire.
The report cites lower 2012 potash shipments versus original expectations. As a case in point, the firm is seeing elevated inventory levels going into year-end for these companies, but it does believe that some of the higher inventories will be offset by healthy potash demand trends.
For Potash Corp., is lowered 2012 earnings target by almost 5% to $4.02 for 2012. For Mosaic the firm lowered the earnings by about 4% to $5.07 EPS.
Despite the lowering of estimates, Goldman Sachs is still expecting that there is upside for patient investors because it sees a healthy spring season bringing some enthusiasm.
For whatever it is worth, Mosaic just declared another $0.05 quarterly dividend on Thursday. That is not very much because it is only a 0.4% dividend yield. Potash Corp. has a dividend yield of about 0.6%. The two companies have also this week announced the settlement over a Canadian potash mine dispute before trial.
It turns out that J.P. Morgan downgraded Mosaic co. to Neutral from Overweight this morning.
Despite the research containing some upside, that view is not being shown in the stocks. Mosaic shares are down 3% at $49.60 and Potash Corp. shares are trading down 1.9% at $40.14 right after the open.
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