Analysts are quickly ratcheting up their price targets on Potash Corp. of Saskatchewan Inc. after the fertilizer giant reported robust quarterly results Thursday and provided guidance that painted an optimistic picture of things to come.
Potash's fourth-quarter earnings per share of $1.77 (U.S.) beat the consensus of $1.62, while 2011 guidance was raised to $8.40-9.60 from $8.00-8.75.
Canaccord Genuity analyst Keith Carpenter believes the steady purchases of fertilizer seen in 2010 will continue through this year, with farmers scrambling to boost crop yields as prices for their commodities continue to rise. "Furthermore, we believe we are witnessing the early stages of stock rebuilding at the distributor level, which should further add to the demand growth for fertilizers," he said.
Scotia Capital Inc. analyst Ben Isaacson commented that he expects "knock-out" first- and second-quarter results but cautioned that over the longer term the company's valuation at this point of the fertilizer cycle is beginning to look rich.
Upside: Canaccord Genuity hiked its price target by $22 to $207 (U.S.); Scotia Capital Inc. by $5 to $173, and TD Newcrest by $10 to $165. The median price target of analysts who cover the stock is $175, according to Capital IQ.
TransAlta Corp. prospects will be tempered by continued high maintenance activity at its facilities over the medium term, cautions TD Newcrest analyst Linda Ezergailis. While the fundamental long-term demand growth outlook for the Alberta power market, in which TransAlta has the majority of its assets, is relatively positive, continued weak natural gas prices will keep power values low over the next few years. This will likely delay the upside related to new capacity builds and resigning contracts, she said.
Downside: Ms. Ezergailis cut her price target by $1 to $20 and maintained her "hold" recommendation.
RBC Dominion Securities Inc. analyst Geoffrey Kwan hiked his GAAP earnings per share forecast for Equitable Group Inc. ETC-T by 8 per cent for this year, citing higher forecasted loan growth and improving economies of scale. He sees potential for the mortgage financing firm to hike its dividend later this year.
Upside: Mr. Kwan raised his price target by $6 to $33 and upgraded the stock to "outperform" from "sector perform."