Incitec Pivot looks to benefit from continuing fertiliser price rallies, with di-ammonium phosphate, ammonia and urea up 10%, 46% and 5% respectively in the last three months, supported by supply constraints as noted by UBS.
The broker has upgraded its earnings per share forecasts 58% and 44% for FY22 and FY23, noting Incitec Pivot is particularly sensitive to di-ammonium phosphate and ammonia pricing.
The company’s Waggaman ammonia plant is also set to restart production in April, which UBS notes should allow production to command a record ammonia contract price of US$1,625 from May.
The Buy rating is retained and the target price increases to $4.50 from $3.95.
Sector: Materials.
Target price is $4.50.Current Price is $3.82. Difference: $0.68 – (brackets indicate current price is over target). If IPL meets the UBS target it will return approximately 15% (excluding dividends, fees and charges – negative figures indicate an expected loss).
