Stock analyst rates US FMC shares a “buy”

17 November 2008 17:08  [Source: ICIS news]

HOUSTON (ICIS news)--Investment analysis firm Longbow Research re-iterated its “buy” rating on US soda ash producer FMC on Monday, saying strong global demand for the commodity will buoy the company during the currently rough economic seas.

Longbow analyst Dmitry Silversteyn said he expects Philadelphia, Pennsylvania-based FMC to attain about 20% in earnings growth in 2009. The company’s soda ash segment should gain enough to offset its agricultural chemical business falling victim to the global downturn in commodity prices, he said.

“Given limited supply and growing export demand, the soda ash market is tight worldwide and should remain tight in the near future, with limited capacity expansion around the globe,” Silversteyn said.

Soda ash is a key ingredient of glass and pharmaceuticals, among other products.

In October, FMC reported net profit of $80m (€64m), up 116% from $37.1m reported for the same time last year, due to higher prices for phosphates and soda ash.

The analyst cited in his decision FMC’s plans to restart 100,000 tons/year (90,720 tonnes/year) of previously mothballed soda ash production capacity at its Granger plant, adding competitors’ plans to grow production in China have been delayed.

Silversteyn said he was confident the company would realise price increase nominations of $50/ton for soda ash in 2009. The chemical is currently assessed at $145-185/ton FOB (free on board) Wyoming, according to global chemical market intelligence service ICIS pricing.

Silversteyn set a price target of $60/share. FMC stock was $37/share at market close on Friday, down from a 52-week high of $79.66/share in June.

($1 = €0.80)

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By: Ben Lefebvre
+1 713 525 2653

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