CF Industries (CF) Stock Gains on Ratings Upgrade

CF Industries (CF) stock is increasing this afternoon after BMO Capital raised its rating on shares to 'outperform' given its dividend and free cash flow.
By Rachel Graf ,

NEW YORK (TheStreet) -- Shares of CF Industries (CF) - Get Report are climbing 5.70% to $24.84 in mid-afternoon trading on Friday after BMO Capital Markets hiked its rating on the stock to "outperform" from "market perform" in a note released earlier today. 

The firm trimmed its price target to $28 from $30 on shares of the Deerfield, IL-based fertilizer distributor. 

"It is early for a broad fertilizer rebound (oversupply), but we are comfortable adding risk as downside may be better priced in post a second quarter reset, more so for nitrogen (trading near floors) than potash/phosphate," the firm said.

Although CF's estimates have been cut 50%, the company is the leading free cash flow generator and its $1.20 dividend looks safe, BMO Capital pointed out.

Additionally, spot urea and UAN have likely bottomed, though they might not "materially improve" until late 2016, the firm noted.

Separately, TheStreet Ratings team rates the stock as a "hold" with a ratings score of C.

CF Industries' strengths such as its revenue growth, reasonable valuation levels and expanding profit margins are countered by weaknesses including feeble growth in the company's earnings per share, deteriorating net income and weak operating cash flow.

You can view the full analysis from the report here: CF

TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author. 

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