Tuesday, December 28, 2010

Will Mosaic (NYSE:MOS) Catch Up with Peers?

Comparing Mosaic's (NYSE:MOS) performance with their peers in a year where most of them took off because of fertilizer demand, prices and resultant margins, the question is why Mosaic only moved up 19 percent when the rest of them outperformed.

Gleacher says, "Amidst a year of fertilizer revival, MOS has significantly underperformed its peers, with the stock up 19% compared to 46% for CF Industries (NYSE:CF), 38% for Agrium (NYSE:AGU), 32% for Potash (NYSE:POT) 24% for Intrepid Potash (NYSE:IPI) (The S&P is up 13%). We suspect the uncertainty regarding the South Fort Meade phosphate mine litigation in Florida played a big role in the underperformance. However, with strength in earnings momentum expected to resume in the quarters ahead as rising potash and phosphate prices flow through the financial results, we expect the relative underperformance to disappear.

"...MOS should benefit from the recent rise in potash and phosphate prices and we have increased our FY2011 EPS to $4.13 from $4.00 and FY2012 EPS to $5.15 from $5.00."

Gleacher & Co. reiterates a "Buy" rating on Mosaic, which was trading at $71.98, up $0.50, or 0.70 percent, as of 11:52 AM EST. Gleacher has a price target on them of $80.

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