CF Industries Faces Mixed Performance Despite Strong Q3 Results
Northbrook, Illinois-based CF Industries Holdings, Inc. (CF) specializes in producing and selling hydrogen and nitrogen products for various industries, including energy and agriculture. With a market cap of $14.8 billion, CF’s key nitrogenous fertilizer offerings include ammonia, granular urea, urea ammonium nitrate solution, and ammonium nitrate.
Stock Performance Lags Behind Major Indices
Over the past 52 weeks, CF shares have underperformed compared to the broader market. CF has only gained 9%, whereas the S&P 500 Index ($SPX) experienced a significant increase of 20.7%. On a year-to-date (YTD) basis, CF’s stock has slightly dipped, contrasting with SPX’s 3.2% rise.
Comparison with Sector Performance
When looking at sector-specific performance, CF has performed better than the Materials Select Sector SPDR Fund (XLB), which returned 7.4% over the same period. However, it fell short of XLB’s 6.1% gain on a YTD basis.
Recent Downgrade and Impact
On January 24, CF’s stock price dropped by 7.5% that day after JPMorgan Chase downgraded it from “Neutral” to “Underweight,” setting a price target of $75. This decision was influenced by predictions of rising domestic natural gas prices—CF’s primary raw material—that may prompt downward revisions in the company’s earnings estimates for 2025 and 2026.
Despite this setback, CF’s shares saw a slight increase on October 30 after the company announced better-than-expected Q3 earnings. The earnings per share (EPS) reached $1.55, significantly higher than the Wall Street estimate of $1.05, marking an impressive 82.3% increase year-over-year. Additionally, revenues amounted to $1.4 billion, exceeding forecasts by 12.8% and rising 8% from the previous year, bolstered by higher fertilizer prices during the quarter.
Future Earnings and Analyst Ratings
For the fiscal year ending in December, analysts predict a 21.4% decline in CF’s EPS compared to the previous year, estimating it at $6.31. The company has had a mixed history regarding earnings surprises, beating estimates in two of the last four quarters while missing in the other two.
Among 15 analysts covering CF, there is a consensus rating of “Hold,” which includes five “Strong Buy,” seven “Hold,” one “Moderate Sell,” and two “Strong Sell” ratings.
Outlook and Potential Upside
On January 27, Piper Sandler retained an “Overweight” rating on CF while increasing its price target to $115, representing the highest target on Wall Street. This new target suggests a considerable potential upside of 35.2% from current prices. The average price target stands at $93.50, indicating a 9.9% upside from CF’s present levels.
On the date of publication, Neharika Jain did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. For more details, please refer to the Barchart Disclosure Policy here.
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