Raising Mosaic FVE to $42 on Higher Near-Term Fertilizer Prices; Shares Remain Overvalued

Mosaic reported strong first-quarter profits, as the company benefited from fertilizer prices at or near all-time highs. Operating earnings roughly quadrupled during the quarter driven by higher potash and phosphate profits. We have increased our near-term fertilizer price outlook as we expect peak cyclical conditions will remain in place through at least the first half of the year. Accordingly, we expect Mosaic will generate record profits in 2022. However, we continue to forecast phosphate prices will begin to fall in late 2022 as China exports return to the market. We also forecast potash prices will fall in 2023 as Russia and Belarus resume exports. Having updated our model to reflect higher near-term fertilizer prices, we raise our Mosaic fair value estimate to $42 per share from $40. Our no-moat rating is unchanged.