Agrium Indisutries, Inc. (NYSE: AGU - News) is growing through acquisition and organic expansion. The acquisition of United Agri-Products is driving revenues and profits supported by an expanded product line in the major business segment.
However, the company is affected by the global credit crunch, resulting in postponement of fertilizer purchases by the farmers. Moreover, lower international demand as well as reduced crop and energy prices have added to the market uncertainty and resulted in a significant decline in phosphate and nitrogen prices. These factors lead to many North American farmers deferring much of their fall 2008 crop nutrient applications to 2009.
Nevertheless, Agrium expects the situation to improve in the near future. The company also has a significant free cash flow. Therefore, we rate the shares a Buy with a target of $43.00.
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