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On Friday, Deutsche Bank (ETR:DBKGn)'s analysts updated their assessment of K+S AG (SDF:GR) (OTC: KPLUY), increasing the price target on the company's stock to EUR10.50, up from the previous EUR10.00. Despite the raised price target, the firm maintained a Sell rating on the stock. The adjustment reflects a nuanced outlook on the company's financial performance. The stock, currently trading at $7.00, has shown remarkable strength with a 31% gain year-to-date, according to InvestingPro data.
The analysts, led by Virginie Boucher, projected a 7.5% decrease in K+S AG's first-quarter EBITDA to EUR185 million, which is still 7% above the Bloomberg consensus. This decline was attributed to a combination of lower pricing and increased costs, especially for energy, which is expected to outweigh slight volume gains in the Agriculture and Industry+ sectors. InvestingPro analysis shows the company maintains a strong financial position with a current ratio of 3.02, indicating robust liquidity to manage near-term obligations.
Looking ahead to 2025, Deutsche Bank anticipates that K+S AG's management will reaffirm its EBITDA guidance range of EUR500-620 million. However, the analysts now consider the lower end of this range to be improbable based on current trends. Consequently, they have revised their 2025 EBITDA forecast upwards by 5% to EUR590 million, which is 3.5% higher than Bloomberg's consensus and 5% above the mid-point of the company's provided guidance range.
The upward revisions for the 2025 and 2026 EBITDA forecasts, ranging from 5% to 7%, were driven by two main factors: lower anticipated energy costs and higher potash prices. These factors have contributed to the decision to raise the price target for K+S AG stock to EUR10.50. The report provides a detailed analysis of the expected financial performance of K+S AG in the coming years, considering various market conditions and company-specific factors.
In other recent news, CFRA analysts have downgraded K+S AG to a Strong Sell from a previous rating of Sell, with a maintained price target of EUR10.00. This decision is driven by concerns over the volatility of fertilizer prices, particularly potash, influenced by geopolitical and trade uncertainties. The analysts have also adjusted their earnings per share estimates for K+S, reducing them to EUR0.16 for 2025 and EUR0.20 for 2026. A significant drop in free cash flow was reported for 2024, decreasing to EUR62 million from EUR311 million in the previous year, which resulted in a lower dividend payout of EUR0.15 per share compared to EUR0.70 in 2023. K+S management is aiming for a break-even free cash flow in 2025, indicating potential challenges in improving shareholder returns. CFRA's price target suggests forward P/E multiples of 63x for 2025 and 50x for 2026, underscoring a bearish outlook. Despite some recovery signs in potash prices in Brazil, the possible re-entry of Russian and Belarusian supplies could add downward pressure on prices in 2025. These developments reflect a cautious view of the company's financial prospects.
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