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Investing.com - UBS lowered its price target on Mosaic (NYSE:MOS) to $40.00 from $44.00 on Monday, while maintaining a Buy rating on the fertilizer producer’s stock. The new target still represents significant upside potential from the current price of $31.27, which has dropped over 14% in the past week. According to InvestingPro analysis, the stock appears undervalued at these levels.
The firm’s analysis indicates the market is currently pricing Mosaic at approximately 5.1 times earnings, below the 6.5x medium-term/10-year average, despite above mid-cycle earnings in phosphates. The stock’s current P/E ratio of 10.37x comes alongside a strong dividend track record, with InvestingPro data showing 15 consecutive years of dividend payments.
UBS suggests the current market pricing implies about $2.25 billion in 2026 EBITDA, including a $6 per share value for Saudi Arabia operations, with only $0.8 billion coming from phosphates EBITDA.
The firm’s own 2026 EBITDA estimate for Mosaic stands at $2.97 billion, which is 32% above market expectations, based on an improving production outlook despite projecting a $70-$80 per metric ton decline in phosphate prices.
UBS notes that to reach the market’s implied phosphate EBITDA level, there would need to be no improvement in phosphate volumes above approximately 6.3 million metric tons, along with similarly weak fixed cost absorption and a $45-$50 per metric ton decline in pricing.
In other recent news, The Mosaic Company reported lower-than-expected third-quarter phosphate production volumes, reaching approximately 1.7 million tonnes. This shortfall was attributed to mechanical issues at the Riverview sulfuric acid plant and utility interruptions at the Bartow facility, impacting production for the remainder of the month. Additionally, Mosaic completed the sale of its idled Patos de Minas phosphate mining unit in Brazil to Fosfatados Centro SPE Ltda. for $111 million, which is expected to result in a book gain of $80-90 million in the fourth quarter of 2025. The company also announced an agreement to sell its Taquari-Vassouras potash mine in Brazil to VL Mineração Ltda. for up to $27 million, pending regulatory approval. In a related development, RBC Capital downgraded Mosaic from Outperform to Sector Perform, lowering the price target to $30.00, citing the unexpected phosphate production cuts as a factor. These recent developments highlight significant changes in Mosaic’s operations and financial strategy.
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