Agrium Raises Guidance; Analysts Still Expect Higher Earnings

Agrium Inc. (AGU) impressed everyone on Wednesday by hiking its second-quarter earnings guidance from a range of C$1.92 - C$2.22 a share to between C$2.80 and C$3.00.

But analysts figure that forecast is still too low, because it does not include any contribution from the recent acquisition of UAP Holdings Corp. UBS Securities analyst Brian MacArthur wrote that he expects earnings of C$3.20 a share. Both he and RBC Capital Markets analyst Fai Lee noted the company's strength in both its retail and wholesale businesses.

Mr. MacArthur raised his target all the way to C$118 a share from C$95. That assumes a multiple of 12 times his cash flow per share estimate for this year of C$9.80. Mr. Lee's target is C$115 and he noted that he plans to move his estimates for the company higher in the near-future.

In a note to clients, Mr. MacArthur wrote:

We continue to like [Agrium] over the long-term as the company provides good exposure to various fertilizer markets combined with a growing retail business.