Chuck Magro must be sleeping well at night. His $30B+ mega-merger will close imminently, nitrogen is set to exit cycle lows over the next 12 to 18 months, recent demand strength means potash may not be as doomed as first thought, and Chuck has numerous levers available to unlock shareholder value.
We see Nutrien eventually hitting the low US$60s, implying a 30% total return from today’s US$48 price. Nutrien offers something compelling for all investors: a good yield at 3.3% with dividend growth, a share buyback story – likely to unfold over the next year, strong leverage to the start of the next nitrogen cycle, a balance sheet de- risking story, growth of its stable cash flow generating business, and most importantly, value. We have raised our targets on AGU/POT to US$130/US$23, derived from a US$58 Nutrien price. You need to own this name.