FMC stock rating cut to Sector Perform by RBC Capital

On Wednesday, RBC Capital issued a downgrade for FMC Corp . (NYSE:FMC) from Outperform to Sector Perform, significantly reducing the price target to $47.00 from the previous $78.00. The decision came after FMC’s fourth-quarter earnings report, which highlighted immediate challenges the company is facing, including excess inventory in various countries and a slowdown in purchases by U.S. farmers. Despite these challenges, InvestingPro data shows FMC maintains a strong dividend yield of 4.29% and has sustained dividend payments for 19 consecutive years. According to InvestingPro’s Fair Value analysis, the stock appears slightly undervalued at current levels.

FMC’s recent earnings report indicated that the company is experiencing volume headwinds as it enters the first quarter of 2025. These headwinds are due to an oversupply of channel inventories and cautious buying from U.S. farmers who are aiming to keep their inventories low. RBC Capital analysts project these volume challenges to persist throughout the fiscal year 2025, potentially impacting the company’s profit margins due to fixed cost absorption. InvestingPro data reveals the company’s revenue declined 16.02% in the last twelve months, with seven analysts recently revising their earnings expectations downward. For deeper insights into FMC’s financial health and future prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.

The analysts at RBC Capital also pointed out that FMC is likely to face pricing and foreign exchange headwinds, with the broader economic downturn expected to extend the period of earnings weakness for the company. In response to these factors, RBC Capital has revised its first quarter and full-year 2025 EBITDA estimates for FMC downward, to $110 million and $910 million, respectively, from the previous forecasts of $208 million and $1.04 billion.

The revised price target of $47 reflects a lower valuation multiple of 10 times the firm’s expected fiscal year 2025 EBITDA, down from the prior multiple of 12.5 times. Despite the downgrade, RBC Capital suggests that its outlook on FMC could improve heading into 2026 if the company shows signs of overcoming its current challenges, such as ending channel destocking, improving volumes, and making progress toward its 2027 growth targets.

In other recent news, FMC Corporation has been the subject of significant developments. Morgan Stanley (NYSE:MS)’s Vincent Andrews has lowered the price target for FMC Corp from $70 to $46, while maintaining an Equalweight rating on the stock. This adjustment is a response to a strategy reset by FMC Corp and is expected to align with an anticipated share price reset.

In addition, FMC Corp has reported fourth-quarter earnings that surpassed analyst estimates, but revenue fell short of expectations. The company posted adjusted earnings of $1.79 per share, exceeding the consensus estimate of $1.63. However, revenue of $1.22 billion missed analyst projections of $1.34 billion.

Furthermore, the company provided disappointing guidance for 2025, expecting full-year adjusted earnings per share of $3.26 to $3.70, compared to the $4.36 analyst consensus. The revenue guidance of $4.15 billion to $4.35 billion also fell short of the $4.4 billion estimate. These recent developments are crucial for investors to consider in their assessments of FMC Corp.

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