Nufarm stock rating downgraded at Jefferies, target cut to AUD1.96

On Thursday, Jefferies analysts reduced their rating on shares of Nufarm (OTC:NFRMY) Ltd. (NUF:AU) (OTC: NFRMY), from Hold to Underperform. The firm also slashed the price target on the company’s stock to AUD1.96 from the previous target of AUD4.40. This adjustment follows Nufarm’s performance, which fell short of expectations due to underwhelming results in its Seeds division and increased corporate expenses. Want to stay ahead of analyst movements? InvestingPro subscribers get real-time access to analyst ratings, price targets, and comprehensive financial metrics to make informed investment decisions.

The analysts at Jefferies pointed out that the deterioration in the Omega-3 Canola segment was particularly disappointing. They noted that the decline in oil prices had revealed Aquaterra’s position as a marginal supplier. This status is expected to persist until the company secures deregulation in China, which Jefferies forecasts might not happen until the fiscal year 2028.

Additionally, the review of Nufarm’s Seeds division brought to light challenges in funding growth initiatives. The analysts emphasized that with a return on funds employed (ROFE) consistently below the weighted average cost of capital (WACC), along with suboptimal positions in Crop Protection (CP) and Seeds, the company’s investment appeal is limited.

The Jefferies team also remarked on the company’s poor cash flow throughout economic cycles. They suggested that this factor, combined with the other concerns highlighted, provides little justification for investment in Nufarm’s shares at this time. The downgrade and reduced price target reflect these concerns and the analysts’ outlook for the company’s financial health and market position.

In other recent news, RBC Capital Markets has revised its price target for Nufarm Ltd. shares, reducing it from AUD5.00 to AUD3.50. This adjustment comes after Nufarm reported a 5% decline in earnings before interest, taxes, depreciation, and amortization (EBITDA) for the first half of 2025, totaling $206 million. The reported earnings were below RBC and consensus estimates by 11% and 14%, respectively. A significant factor affecting the earnings was a decrease in fish-oil prices, impacting the Omega-3 segment. Without this impact, Nufarm’s EBITDA would have been closer to expectations, with a slight variance of +2% to -2%. RBC analysts express concerns that the current subdued pricing in the Omega-3 market could continue, potentially affecting earnings in the second half of 2025. This situation might lead Nufarm to reevaluate its planting strategy for the fiscal year 2025. Consequently, RBC has reduced its earnings and valuation estimates for Nufarm by 22% to 40%. Despite these challenges, RBC maintains a Sector Perform rating with a Speculative Risk qualifier, noting potential valuation upside at current levels.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.