Mosaic (NYSE:MOS), Potash (NYSE:POT), Agrium (NYSE:AGU) PT Raised on Potash, Phosphate Margins

Demand for fertilizer in 2011 should result in increased margins for potash and phosphate, which has boosted the price targets on Mosaic (NYSE:MOS), Potash (NYSE:POT) and Agrium (NYSE:AGU) from Canaccord.

Canaccord said, "We expect potash and phosphate margins to increase into C2011 due to increased potash prices that have yet to be realized from price increases announced in the fall, as well as further increases into the international market. In phosphate, the company is beginning to realize higher prices that came into effect a few months ago. Furthermore, we expect India to reset at a higher level for 2011. All the while, we expect cost pressures to be manageable for Mosaic from an input perspective, such that margins expand nicely into C2011."

"We expect tight grain supplies will continue to make headlines in the first half of 2011. We believe that the southern hemisphere will be unable to alleviate the problem with the current harvest season and that it will be up to the northern hemisphere to grow a strong crop, in particular, an increased corn planting to ease a very tight situation. This situation bodes well for fertilizer equities over coming quarters."

"Due to our positive view on the grain market, the tight phosphate and potash markets, and what we believe to be the very early signs of re-stocking of inventories by distributors, we believe 2011 will be a solid year for the fertilizer producers. We continue to recommend shareholders add to their positions in Mosaic."

Our target price for Mosaic increases to US$96 from US$82 previously, based on 18x our F2012E EPS of US$5.37.

Our target price for Potash Corp increases to US$185 from US$175 previously, based on 19x our blended 2011E/2012E EPS of US$9.71.

Our target price for Agrium increases to US$108 from US$105 previously, based on 16x our blended 2011E/2012E EPS of US$6.77.

Mosaic was trading at $76.94, gaining $1.93, or 2.59 percent, as of 12:05 PM EST. Agrium was trading at $92.21, up $1.53, or 1.69 percent. Potash was at $160.10, increasing by $3.45, or 2.20 percent.