Analyst Note| Seth Goldstein, CFA |
Nutrien reported solid first-quarter results as adjusted EBITDA was up nearly 60% versus the prior-year quarter. Higher volumes and prices drove the growth in the retail and fertilizer businesses. Given the sharp rise in fertilizer prices to begin the year, we have slightly increased our near-term potash and nitrogen price forecast. Having updated our model to reflect these changes, we raise our Nutrien fair value estimate to $63 per share from $62. Our CAD fair value estimate falls from CAD 79 to CAD 78 due to a strengthening of the loonie versus the dollar since our last update. Our narrow-moat rating is unchanged. We view Nutrien shares as slightly undervalued at current prices, with the stock trading roughly 10% below our fair value estimates but in 3-star territory.