SQM, South America’s Least-Liked Stock, Drops to Eight-Month Low

Sociedad Quimica y Minera de Chile SA, Chile’s largest fertilizer company and South America’s least-liked stock among analysts, fell to an eight-month low after Citigroup Inc. cut its forecast on the stock.

Shares slid 1.9 percent to 14,250 pesos at 2:44 p.m. in Santiago, the lowest level on a closing basis since Feb. 6. Its American depositary receipts declined 2.1 percent to $24.15. The benchmark IPSA index fell 1.2 percent.

Citigroup reiterated a sell recommendation in an e-mailed research note published yesterday, while cutting its price target on SQM’s shares traded in New York to $23 from $27.50. The bank lowered its estimate for potash prices in 2015 to $350 a ton from $370 amid a drop in demand. Potassium products, derived from potash, account for 28 percent of SQM’s sales.

“We maintain our sell rating on SQM as current valuations have yet to fully reflect the fragile fundamentals across SQM’s segments,” Citigroup analysts Juan Tavarez and Andrew McCarthy said in the research note.

SQM’s local shares have an average consensus rating among eight analysts of 1.5, with 1 meaning sell and 5 buy, according to data compiled by Bloomberg. That is the lowest among South American equities with at least three analyst ratings and a minimum market value of $500 million. For all of Latin America, Mexican mining company Minera Frisco SAB, controlled by Carlos Slim, has the lowest rating, at 1.43.

Citigroup also forecast pressure on iodine and lithium prices as competitors increase production. These products and derivatives account for another 28 percent of SQM sales, according to data compiled by Bloomberg.

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