Wednesday, October 22, 2008

Mosaic (NYSE:MOS): Mosaic Company Extreme Oversold Condition Changing Rating from Sell to Strong Buy with $60 Price Target - SISR

Strategic International Securities Research (SISR) is upgrading Mosaic (NYSE:MOS) to Strong Buy from Sell with a $60 price tgt (from $33). Firm is reversing their Sell rating on the stock to adding it to their recommended list.

Firm notes they are looking for current quarterly earnings to come in at $2.18, and full year estimate of $10.63 on revenues of $16.2 Billion. They believe that there will be a period of readjustment for Mosaic with both price declines and output reduced. Mosaic and the industry however are very effective at holding prices up by reducing output. SISR expects this to be the pattern for the coming months and even year or so as the price of these commodities adjusts to the international condition of a worldwide slowdown. Their projections are that output will be reduced by about 10% with prices declining by 20% to 30% over the next year. Given that price have increased by more than 400% this decline is relative by comparison.

Firm feels that given a historical PE of 12 for the industry their target is rather conservative with consensus currently being at $11.26 for 2009.

It is too early to make an extended forecasts but it is likely that just as on the upside this stock was overvalued, they believe it is currently undervalued.

Notablecalls: I bet most of you have never heard of Strategic International Securities Research (SISR) or their analyst Philip Miller covering Mosaic.

Yet, among the inst. side of the business, SISR carries weight. Why?

Just take a look at their recent track in MOS. They have played it almost perfectly:

These guys don't publish much. But when they do, you better take note.


dcxavier said...

Corn is down around $4/bushel from over $7, historically it has been $3 or less. Locally, I have seen land planted in corn that has lied fallow for over ten years. With corn down, that land probably won't be planted next year. That's all marginal demand that is going away. Oil went under $70 today, wholesale gasoline is $1.60/gallon, who needs ethanol? With all the new capacity coming on line, the ferts are still in a heap of trouble. You might get $60 on a short covering bounce, but the fundamentals look awful for them, think the estimates are way out of line.

FeirFactor said...

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