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Investing.com - JPMorgan downgraded Compass Minerals International (NYSE:CMP) from Overweight to Underweight while raising its price target to $18.00 from $15.00. According to InvestingPro data, the stock has shown remarkable strength with an 86.5% return over the past year, despite currently trading at $19.21.
The investment bank expects Compass Minerals to report approximately 6% lower EBITDA in fiscal year 2025 compared to fiscal 2024, with estimates of $194 million versus $206 million previously. The company’s current EBITDA stands at $140.1 million, with InvestingPro analysis suggesting the stock is currently undervalued based on its Fair Value model.
JPMorgan noted that Compass began its fiscal year slowly due to weak snowfall patterns, though earnings later accelerated as snowfall levels strengthened and the company made operational progress in its Plant Nutrition business.
Despite the downgrade, the firm highlighted that Compass has been a strong generator of free cash flow in fiscal 2025 through working capital benefits from inventory reduction, projecting almost a 17% free cash flow yield for the year.
The bank expects Compass to reduce its net leverage from 4.5x at the end of fiscal 2024 to 4.1x by fiscal year-end 2025, with potential for approximately 17% EBITDA growth to $227 million in fiscal 2026 as the company compares against what JPMorgan anticipates will be a very weak first quarter of fiscal 2025.
In other recent news, Compass Minerals reported mixed financial results for its fiscal 2025 third quarter. The company achieved revenue of $214.6 million, surpassing analyst expectations of $207.61 million. This marks a 5.8% increase in revenue compared to the same quarter last year, attributed to higher sales volumes in both the Salt and Plant Nutrition segments. However, Compass Minerals reported an adjusted loss of -$0.39 per share, falling short of analyst estimates of a -$0.01 loss. Despite the earnings miss, the company anticipates improvements in pricing moving forward. These recent developments come as Compass Minerals continues to navigate the challenges in its industry.
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