Roth MKM analyst Joe Reagor initiated coverage on Brazil Potash Corp. (AMEX:GRO) with a Buy rating and a price target of $17, citing the company’s undervalued Autazes potash project.

According to Reagor, Brazil’s heavy reliance on potash imports underscores the project’s importance, and favorable financing terms could unlock additional valuation upside.

The Autazes project could supply 18% of Brazil’s potash demand, producing 2.4 million tons annually. As a major agricultural exporter and potash importer, Brazil’s reliance on external supply underscores Autazes’ strategic value.

The project is well advanced, with construction permits secured. After construction, Brazil Potash can apply for a mining permit—a unique process in Brazil. Following final economic studies, a final investment decision is expected by H2 2025.

Potash prices, currently at $280 per ton due to oversupply, are expected to rebound. Production cuts and 5% annual demand growth over the next decade could significantly improve prices.

Reagor’s $17 price target is based on a 9% DCF valuation, factoring in long-term potash prices of $450 per ton, projected milestones, and the company’s cash flow potential post-construction. At full production, the project could generate $1.1 billion in annual revenue and $700 million in EBITDA.

Risks include dilution from capital raises, regulatory setbacks, lower potash prices, project delays, and cost overruns.

Price Action: GRO shares traded higher by 2.76% at $8.19 at last check Wednesday.

Photo by Ground Picture on Shutterstock.

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This article Brazil Potash Stock Could Double: Analyst Bets On Autazes' Strategic Role In Potash Rebound originally appeared on Benzinga.com

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