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Investing.com -- Shares of K+S AG (ETR:SDFGn) rose over 7% Thursday after analysts at Stifel upgraded the German potash and salt producer to “hold” from “sell,” citing firmer potash prices and improved earnings visibility for 2025.
The brokerae also raised its price target to €14.50 from €10, implying a 13.7% upside from the April 10 close of €12.75.
The first quarter is expected to show improvement from the previous three months, though earnings will likely remain lower compared with a year earlier.
Analysts at Stifel said the recovery in potash pricing—particularly in Brazil—has helped lift sentiment around the company. Muriate of potash prices in Brazil have climbed from a low of $280 per ton to $348.
Based on current pricing trends, Stifel estimates K+S’s full-year EBITDA could reach the upper end of its €500 million to €620 million forecast, about 7% ahead of consensus.
The analysts cautioned, however, that higher costs—particularly from wages and energy—may partially offset the gains.
They expect personnel costs to rise by €20 million and energy expenses by up to €50 million, though a recent decline in natural gas prices could ease the impact.
K+S is forecasting modest growth in sales volumes, with stable potash pricing expected in the second half of the year.
Stifel projects the company will generate €300 million in EBITDA from its Canadian Bethune mine and €270 million from German operations, while the salt and waste management businesses should contribute €100 million. Corporate costs are estimated at €45 million.
The analysts valued the company using a 6x EV/EBITDA multiple for fiscal 2025.
Their valuation model assigns €1 billion to the salt segment and €3 billion to Bethune, while excluding the German mines due to high capital investment and lower free cash flow.
Stifel noted that the potash market remains more stable than other industrial sectors, which are under pressure from trade uncertainty and macroeconomic headwinds.
The sector has not been affected by U.S. tariffs, and no major new supply is expected to enter the market this year. Maintenance-related shutdowns in Eastern Europe could further limit output.
K+S shares remain down more than 14% over the past 12 months. The company is scheduled to report first-quarter results on May 13.