Nutrien Ltd T.NTR

Alternate Symbol(s): NTR

Chemicals Basic Materials

Nutrien Ltd. is a Canada-based provider of crop inputs and services. The Company operates a network of production, distribution and ag retail facilities to serve the needs of growers. The Company operates through four segments: Nutrien Ag Solutions (Retail), Potash, Nitrogen and Phosphate. The Retail segment distributes crop nutrients, crop protection products, seed and merchandise. Its Retail provides services directly to growers through a network of farm centers in North America, South America and Australia. Its retail operations serve growers in seven countries across three continents. The Potash, Nitrogen and Phosphate segments are differentiated by the chemical nutrients contained in the products that each produces. The Company produces and distributes about 26 million tons of potash, nitrogen, and phosphate products for global agricultural, industrial, and feed customers. The Company’s agriculture retail network services over 500,000 grower accounts worldwide.

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Nutrien Ltd

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Post by retiredcfon Jul 29, 2022 10:45am

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Post# 34859916

TD

This is a USD target. GLTA

Nutrien Ltd.

(NTR-N) US$83.51

Update and Q2/22 Preview

Event

Nutrien will report Q2/22 results on August 3 after market close.

Impact: NEUTRAL

We forecast record quarterly adj. EBITDA of $4,731mm (+114% y/y); ~4% below consensus of $4,937mm. We expect results to benefit from very strong fertilizer prices witnessed earlier this year, while sales volume growth is expected to be restrained by a delayed start to the North American planting season.
Outlook & Forecast Update: Since our last forecast update (post-NTR's Q1/22 results), global fertilizer prices have weakened. Although we expected declines over time, nitrogen prices have fallen faster than forecast (potash prices also generally lower, but more resilient and less variance vs. our forecast). Still, notably, despite recent weakness, fertilizer prices continue to trade at historically elevated levels (NOLA urea/U.S. MidWest West potash 55%/112% above 10-year average levels). Of note, we have tempered our Q2/22 sales volume expectations (delayed planting season), lowered our nitrogen price outlook, and factored higher natural gas prices into our model. Our Q2/22 and 2022 estimates decline modestly (the latter is in line with consensus). Our 2023 adj. EBITDA estimate is largely unchanged (EPS up on higher 2022E share buybacks).
NTR 2022 Guidance: Given seasonal delays, lower nitrogen prices, and higher natural gas costs, we see a reasonable likelihood that NTR will guide to the lower- portion of its adj. EBITDA range (TD at $15.0bln vs. NTR's current $14.5bln– $16.5bln range).
We have lowered our target price (reflects reduced sector valuations). Our $110.00 target price is based on 5.5x our 2023E adj. EBITDA (was 6.5x). Notably, NTR trades at 6.2x the $9.2bln mid-cycle scenario adj. EBITDA that NTR outlined at its recent Investor Day (current EV adjusted for 12-month forecast net debt and beyond-forecast period growth capex); an ~1.5 standard deviation discount to the 9.4x 10-year avg. EV/FTM EBITDA valuation of NTR/its predecessor companies.

TD Investment Conclusion

NTR's 2022 outlook appears to have softened. At the same time, NTR's share price (and peer share prices) has declined meaningfully of-late (NTR -22% since early- May). Considering the stock's valuation and our still favourable view of agriculture fundamentals, we see NTR's risk/reward profile as attractive at current levels.