SQM Is Rated Buy as BTG Pactual Sees Pickup in Fertilizer Demand

Soc. Quimica y Minera de Chile SA, Chile’s largest fertilizer producer, may rise 22 percent a year from now as a recovery in fertilizer demand leads to an increase in profits, according to Grupo BTG Pactual.

BTG Pactual resumed coverage of the Santiago-based company with a buy rating and a 12-month price target of $69.30 per American depositary receipt, it said in an e-mailed note to clients today. The bank also cited the company’s plans to expand its iodine and lithium production for its recommendation.

“SQM is poised to deliver earnings growth starting in 2014,” BTG analysts Cesar Perez-Novoa and Alex Sadzawka wrote. “Nitrate prices agreed in January and February with the Chinese and Indian government were down year-on-year, but should stimulate demand starting in late 2013.”

Shares were little changed at 26,900 pesos at 1:14 p.m. in Santiago. Its ADRs advanced 0.5 percent to $56.87, snapping two days of losses.

The ADRs trade at a trailing price-to-earnings ratio of 22.5 times, compared with the average 15.2 times for its global peers, according to data compiled by Bloomberg.

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