Analyst Note| Seth Goldstein, CFA |
Nutrien reported strong third-quarter results. Adjusted EBITDA soared 145% year on year versus the prior-year quarter as higher fertilizer prices were partially offset by higher costs. We have increased our near-term outlook for the three primary fertilizer prices, including potash, nitrogen, and phosphate, to reflect higher spot prices. However, we forecast that fertilizer prices are approaching a cyclical peak and expect prices to moderate after 2022. As a result, our long-term price outlook remains intact. Separately, we have increased our nitrogen cost forecast for Nutrien to reflect our higher long-term U.S. natural gas price forecast. Having updated our model to reflect these changes, we maintain our $68 per share fair value estimate for Nutrien. Our CAD fair value estimate falls to CAD 84 per share from CAD 85 due to a strengthening of the Canadian loonie versus the U.S. dollar since our last update.