CF Industries stock upgraded to Overweight by Barclays on low-carbon benefits

Investing.com - Barclays (LON:BARC) upgraded CF Industries (NYSE:CF) from Equalweight to Overweight on Wednesday, while raising its price target to $100.00 from $95.00. The stock, currently trading at $82.90, appears undervalued according to InvestingPro analysis, with analyst targets ranging from $80 to $110.

The upgrade reflects Barclays’ updated accounting for low-carbon tonnage in costs within CF Industries’ Ammonia segment, which is expected to provide pretax benefits on a consolidated level.

Barclays anticipates CF Industries will see a net $50 per ton benefit from the 45Q tax credit, without adding incremental tons to its production.

The investment bank projects these benefits will be implemented on a rolling basis, ramping up to 1.9 million metric tons of low-carbon ammonia in approximately two years.

These changes have led Barclays to forecast approximately 10% higher adjusted EBITDA estimates and higher sales for CF Industries in 2026, with ongoing share buybacks further supporting the Overweight thesis.

In other recent news, CF Industries reported second-quarter earnings that fell short of analyst expectations, with earnings per share at $2.37 compared to the anticipated $2.40. However, the company’s revenue exceeded forecasts, coming in at $1.89 billion, which surpassed the consensus estimate of $1.78 billion and represented a 20% increase from the previous year’s $1.57 billion. Wells Fargo (NYSE:WFC) raised its price target for CF Industries to $108 from $101, maintaining an Overweight rating on the shares. The investment bank noted that the company’s second-quarter results were impacted by unplanned turnarounds and higher SG&A costs. Wells Fargo anticipates these issues will reverse in the second half of the year, although the third quarter will be affected by planned turnarounds. These developments highlight significant recent changes for CF Industries.

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