Friday, May 20, 2011

Follow-up: "Mosaic: Upgraded to Positive from Neutral at Susquehanna" (MOS)

 The earlier "Mosaic Announces Pricing of Secondary Offering, Susquehana Says "BUY", Charity Scores $4 Billion (MOS)" had a snippet from Notable Calls, here's more.

The stock is down 85 cents at $65.46.
A great day to buy some calls!
(Susquehanna's parent company, Susquehanna International Group is probably the largest privately held options trading firm in the world.*)
Notable Calls brings it on home:
Susquehanna Agriculture analyst Don Carson is upgrading Mosaic (NYSE:MOS) to Positive from Neutral with a $87 price target (prev. unch).

Susquehanna expects that the removal of most of the uncertainty surrounding the Cargill overhang will shift investor focus back to Mosaic's strong fundamental outlook for FY11/FY12. With the $65 per share secondary pricing reflecting an EV/EBITDA multiple of 6.6x their CY11 estimates, a significant discount to the 9.5x multiple at which peer POT trades, they believe MOS shares offer investors compelling upside from current levels.

Compelling risk/reward. The $65 per share pricing of the secondary offering represents a 24% discount to the $85 price at which MOS shares traded when the Cargill divestiture was originally announced on January 18 versus a 14.7% decline for the group over the same time-frame. Mosaic's under-performance, in Susquehanna's view, was primarily due to the sizable Cargill overhang. With 64-73% of the 157 mln shares that are eligible for distribution in the first 15 months post the deal closing now placed, they expect investor focus will shift back to the strong grain and potash outlook, and the compelling value that MOS shares offer at current levels....MORE
Options: "Beating the Odds - Susquehanna International - Jeff Yass"

The June  65's, 67.5's and 70's are bid at $2.95, $1.85 and $1.12 respectively.