NEW YORK (
(MON - Get Report)
Potash Corp. of Saskatchewan
(POT - Get Report)
were downgraded Wednesday by Lazard Capital Markets following a fiscal fourth quarter loss and weaker-than-expected 2013 outlook from Monsanto.
In lowering both Monsanto to "Neutral" from "Buy" analyst Edlain Rodriguez did not directly mention Monsanto's earnings results, released Wednesday morning. However, he appeared to allude to the pre-market selloff in the shares following Monsanto's announcement. Monsanto shares were down 2.31% to $88.47 20 minutes after the open Wednesday, while Potash shares were down 1.76% to $41.88.
"While we would have liked to keep recommending the stocks and say buy on weakness, we can't really point to any imminent improvement in fundamentals or upward earnings revisions that should lead to meaningful stock price appreciation," Rodriguez wrote. He argued fundamentals for potash--a key ingredient used in many fertilizers--"will remain challenged in the medium term as prices continue trending downward."
He added that prices would need to move lower to result in contract signings in India and China, "and with no prospect for higher prices, we believe downward earnings revisions will limit any upside."
Written by Dan Freed in New York