From Notable Calls:
Goldman Sachs is upgrading Potash (NYSE:POT) to Buy from Neutral with a $140 price target.
According to the firm the upgrade is based on an improved demand outlook for potash in 2010 both in the US and globally. Over the past few weeks, datapoints have confirmed returning demand and they believe POT offers the most attractive way to play a potash recovery. Goldman believes US farmers will significantly increase applications vs. significantly weak 2009 rates, and worldwide demand should pick up following the long-awaited China contract settlement. Finally, investor sentiment on fertilizers has improved meaningfully, yet they believe we are still in the early phase of this upcycle. Firm sees 20% potential upside to their $140 price target.
Catalyst
Goldman notes they want to own POT shares today for two primary reasons:
1. The impending China contract settlement should serve as a major catalyst for the global potash markets and fertilizer stocks. This could come as soon as this month, but we more conservatively expect a settlement by mid-February. Settlement of the China contract will give retailers and dealers’ confidence in restocking inventories throughout the supply chain....
...Notablecalls: Well, Goldman is surely playing ketchup here with POT. Several other firms upgraded POT 20pts lower and I suspect Goldman's Agriculture team was praying for a sizable pullback to upgrade the name. They got one on Friday and voila..we have an upgrade.
While it's tough to love POT here Goldman does highlight the China contract catalyst hinting it may come earlier than most expect. I think most of you have seen the moves in some of the Chinese Agri names which seems to indicate there is something going on in the sector....MORE
