By Simon Avery
Paul D'Amico, an analyst with TD Securities Inc., has cut his rating on Potash Corp. of Saskatchewan (POT) to “reduce” from “hold,” citing weaker-than-expected demand from China and the stock price’s 20% rise since November.
He is maintaining his price target of $95 (U.S.). The shares traded down about 1% in Toronto today but up 19 cents in New York at $111.13.
Mr. D’Amico noted in a report Wednesday that Belarusian Potash Co. has just done a deal to supply China with one million tonnes for 2010 and both price and volume appear to be weak. He expects that there will be excess supply of potash through the first half of next year.
“Although our long term view remains positive due to agronomic requirements, we view the current stock price of POT as rich and lacking near-term positive catalysts as potential positive earnings surprises appear limited without a strong 2010 China contract,” he wrote.
Mr. D’Amico has reduced his share profit estimate on Potash Corp. for 2010 to $5.56, down from $8.25. He also set a 2011 estimate of $7.95 a share, reflecting an expected improvement in potash sales volume and pricing.
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