Nufarm shares extend gains but analysts mixed on FY result
Make us a preferred source
Make us a preferred source on Google
The news: Nufarm extended its rally following better-than-expected full-year results on Thursday but analysts had mixed feelings about the stock.
The numbers: Nufarm shares were up 3.61% to $4.02 by 3:00pm AEDT. On Thursday the company surged 6.01%.
Morningstar has a $7.70 fair value estimate on the stock and said the company was materially undervalued.
Meanwhile, Citi raised its price target to $3.75 but remained sell-rated.
The context: Morningstar analyst Mark Taylor said while the company’s net loss of $4 million was worse than expected due to higher-than-anticipated depreciation, net operating cash flow rose to $472 million from a loss of $126 million, which was pleasing.
Meanwhile, Citi said while the result looked to hint that “an inflexion point is near” there were a “myriad of headwinds beyond NUF’s control that would need to turn in its favour for it to fulfil its FY25 expectation and FY26 aspirations”.
“Active ingredient pricing remains suppressed and while NUF is not engaging in discount practices, its peers continue to cite pricing cuts to attract volumes. With excess capacity in China, this pressure is likely to persevere," Citi said.
What they said: “We were impressed, and the market seemed to take heart, with shares up more than 10% on the day of the announcement. But at about $4, they remain down a third from March 2024 highs and materially undervalued,” Morningstar’s Taylor said.
Citi's analysts said: "For us to turn more positive, we would like to see evidence of sustainable improvement in crop protection pricing."
The sources: Morningstar research, Citi research
