CF Industries (CF) shares are "reasonably" priced due to post-Q4 earnings sell-off and year-to-date stock underperformance, while US nitrogen prices are moving up amid tight supply, BofA Securities said in a note Monday.
"We see a more favorable risk/reward for CF post the recent sell-off combined with improved nitrogen fundamentals," analyst Steve Byrne said in the note, adding that strong nitrogen demand is expected in the months ahead due to lack of imports and a shift toward more corn acres.
The higher nitrogen prices are expected to offset the high natural gas prices in the US, BofA said as it raised its 2025 estimates for the company.
Additionally, BofA said CF's management is confident about its blue ammonia project as it expects either Mitsui or Jera to agree to an ownership stake in the project with proportional offtake agreements.
BofA Securities upgraded CF Industries to neutral from underperform, with a price target of $84.
Price: 77.57, Change: -0.33, Percent Change: -0.42
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