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On Friday, Redburn-Atlantic changed its stance on FMC Corp . (NYSE:FMC), downgrading the stock from Buy to Neutral. The firm also set a price target of $49.00 for the company's shares. Redburn-Atlantic's Tony Jones cited a shift in the risk-reward profile of the stock, influenced by multiple factors with high uncertainty. According to InvestingPro data, FMC's stock has declined nearly 39% over the past six months, with 10 analysts recently revising their earnings estimates downward.Want deeper insights? InvestingPro analysis suggests FMC is currently trading below its Fair Value, with comprehensive metrics available in the Pro Research Report.
Jones pointed out that diamides, which are a crucial component of FMC's business, represent about 40% of sales and half of the company's gross profit. Concerns were raised due to expiring patents for key ingredients Rynaxypyr and Cyazypyr in 2024 and 2026, respectively. Despite FMC's confidence in its process patents providing protection, Redburn-Atlantic remains skeptical about their effectiveness compared to active ingredient patents. The company maintains a gross profit margin of 39% and generated $603 million in levered free cash flow over the last twelve months.
The analyst also highlighted the potential impact of changes in the crop cycle on FMC's performance. Fluctuations in the prices of crops such as corn, soybeans, cereals, or fruits and vegetables could significantly alter farm profitability, posing risks to the company's volume growth and pricing.
Redburn-Atlantic's downgrade reflects concerns over increased competition from generics as patents expire, which could lead to a decline in FMC's expected earnings. The analyst's comments suggest caution due to the complexity of the issues at hand and the possibility that the stock's upside potential may not fully compensate for these risks.
In other recent news, FMC Corporation has extended its $2.0 billion revolving credit facility to June 17, 2028, as part of its strategy to secure long-term financial stability. The company has also been the subject of several analyst notes. Jefferies reduced its price target for FMC Corp to $49, maintaining a Buy rating, despite the company's mixed financial outlook. Meanwhile, UBS downgraded FMC Corp stock from Buy to Neutral and cut the price target to $38, citing concerns over the company's near-term prospects and potential long-term challenges.
In addition, BofA Securities downgraded FMC Corp from Neutral to Underperform and slashed the price target to $48, expressing concerns about the company's ability to meet its full-year guidance, increased competition, and the sustainability of its dividend. These recent developments follow FMC Corp's fourth-quarter earnings report, which exceeded consensus estimates but fell short of market expectations for 2025. The company's sales are estimated to be between $4.15 to $4.35 billion in 2025, with earnings before interest, taxes, depreciation, and amortization projected between $870 and $950 million.
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