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Tuesday, K+S AG (SDF:GR) (OTC:KPLUY) stock rating was upgraded by CFRA from Strong Sell to Hold, with the price target also being increased to EUR16.00 from the previous EUR10.00. The upgrade came after the company reported a slight increase in its first-quarter 2025 earnings before interest, taxes, depreciation, and amortization (EBITDA), which rose 0.2% to EUR200.6 million. This was despite witnessing revenue declines in its Agriculture and Industry+ segments by 2.2% and 2.7%, respectively.
The analyst at CFRA noted the adjustment was supported by higher potash prices, which reached EUR325 per tonne compared to EUR315 per tonne in the fourth quarter of 2024. K+S also adjusted its EBITDA guidance for the year 2025 upward to between EUR560 million and EUR640 million, an increase from the previous range of EUR500 million to EUR620 million. This revision was attributed to the recovery of potash prices in Brazil, which have risen to $360 per tonne from a low of $283 per tonne, and the exemption of U.S. tariffs.
In light of the recent developments, CFRA has revised its earnings per share (EPS) estimates for K+S for the years 2025 and 2026. The estimates for 2025 have been raised to EUR0.50 from EUR0.16, and for 2026 to EUR0.40 from EUR0.20, reflecting the positive impact of pricing tailwinds. However, the firm also cautioned about potential risks associated with an oversupply if exports from Russia and Belarus were to expand.
Despite the positive adjustment in K+S’s financial outlook, the company’s free cash flow (FCF) saw a significant decline of 71.4% to EUR31.8 million in the first quarter. The analyst expressed expectations for stagnant dividends in light of the limited visibility in free cash flow. The new price target of EUR16.00 is based on a 2025 price-to-earnings (P/E) ratio of 32 times and a 2026 P/E ratio of 40 times, which accounts for historical downcycle premiums. The CFRA analyst concluded with a neutral stance on the stock, given the ongoing geopolitical and trade uncertainties that may affect the market.
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