Analyst Note| Seth Goldstein, CFA |
CF Industries reported strong second-quarter results. Adjusted EBITDA rose 22% year on year, driven by higher nitrogen prices. We have increased our near-term nitrogen price forecasts as we expect prices will remain elevated for the remainder of 2021 and into 2022. Separately, we have increased our effective tax rate assumptions for CF to incorporate our updated U.S. corporate tax rate forecast. Having updated our model to reflect these changes, we raise our fair value estimate for CF to $57 per share from $55. Our no-moat rating is unchanged. At current prices, we view shares as undervalued, with the stock trading in 4-star territory.