Tuesday, January 15, 2008

Potash (NYSE:POT): Target upped to a new Street high at RBC Capital

- RBC Capital is upping their tgt on PotashCorp (NYSE:POT) to $195 from $155, reflecting an upward revision to their fertilizer price assumptions.

Firm continues to view PotashCorp as attractively valued given their view that there is potential for potash prices to move significantly higher. They also believe there is substantial value associated with the company's potash expansion projects. If they adjust PotashCorp's current share price for these projects, they estimate that PotashCorp is currently trading at an implied 2009E EV/EBITDA multiple of less than 8x. In comparison, the fertilizer peer group is currently trading at an average 2009E EV/EBITDA multiple of 10x.

Based on analysis, the firm has increased their realized potash price assumptions from $275/tonne to $300/ tonne for 2008 and from $300/tonne to $350/tonne for 2009. Notes assumptions could still be too conservative.

RBC has increased their 2008 and 2009 EPS estimates for PotashCorp from $5.40 and $6.18, respectively, to $6.50 and $8.24.

Notablecalls: This is the news Street high price tgt for POT. The chart is strong and I feel this one has upside today. Keep the other names (MOS, AGU) on your radar as well.

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