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On Friday, CFRA analysts downgraded K+S AG (SDF:GR) (OTC: KPLUY) to a Strong Sell from a previous rating of Sell, maintaining a price target of EUR10.00. The downgrade reflects concerns over the volatility of fertilizer prices amid geopolitical and trade uncertainties, despite the company’s minimal exposure to the American markets. According to InvestingPro data, the stock has shown strong momentum with a 33.5% gain year-to-date, though analysts remain cautious about its valuation metrics.
The analysts at CFRA adjusted their earnings per share (EPS) estimates for K+S to EUR0.16 for 2025, down from the previous EUR0.45, and to EUR0.20 for 2026. They cited the ongoing influence of fertilizer prices on the company’s financial performance, with a particular focus on potash. Despite early indications of a recovery in potash prices in Brazil, the potential re-entry of Russian and Belarusian supplies to the market may exert additional downward pressure on prices in 2025. InvestingPro analysis shows the company maintains a healthy financial position with a current ratio of 3.02 and a moderate debt-to-capital ratio of 0.24.
K+S experienced a significant drop in free cash flow in 2024, which fell to EUR62 million from EUR311 million the previous year. This decline resulted in a lower dividend payout to shareholders, with the company distributing EUR0.15 per share in comparison to EUR0.70 in 2023.
The management of K+S aims for a break-even free cash flow in 2025, which suggests that there may be no forthcoming improvement in returns for shareholders. The price target set by CFRA implies forward P/E multiples of 63x for 2025 and 50x for 2026, highlighting the analysts’ bearish outlook on the stock.
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