UBS Analyst Raises PotashCorp's Price Target

UBS Securities has raised its price target on Potash Corp. (POT) to $285 from $250 on expectations for higher realized fertilizer prices and strong second quarter results due out July 24. The most valuable company on Canada’s benchmark index rose more than 2.5% on Monday, hitting yet another all-time high, and helped drive the TSX up more than 100 points.

UBS analyst Brian MacArthur’s earnings per share forecast for the quarter climbs to $2.68 from $2.34. His 2008 and 2009 forecasts rise to $11.89 and $19.17 from $10.39 and $13.66, respectively. He noted recent potash transactions at around $1000 per metric ton [mt] and prices for another fertilizer, urea, with good support above $600 per mt.

Mr. MacArthur told clients:

PotashCorp is the leading player in one of the fastest-growing segments in the fertilizer business – potash. Given its low-cost operations, which are backed by 100 years of reserves, its associated potash investments, and over 75% of the world’s excess capacity, we believe it is well positioned to meet increasing potash demand.

He also noted that the company is the world’s third-largest phosphate producer and forth in nitrogen.

Merrill Lynch recently boosted its price target on Potash Corp. to $300 from $260.