Credit Suisse First Boston raised its investment recommendaton on Potash Corporation of Saskatchewan (POT)to neutral from underperform, after the company posted $1.17 third quarter earnings per share on Thursday.
Analyst William Young said the company's earnings per share shortfall from his $1.30 estimate is due to the strength of the Canadian dollar and reduced Potash sales to Brazil. It says the aggregate profit recorded and return achieved is excellent by most measures. He cut his $5.40 2005 earnings per share estimate to $5.00 and his $6.75 2006 estimate to $6.10, allowing for a more muted near-term outlook for fertilizer demand and pricing. He noted that the stock sold off in recent weeks, amid a minor third quarter "miss" that further unnerved some investors. He still says Potash is the class act in the fertilizer area and deserves the highest valuation relative to its peers. He set a $91.50 price target on the stock.