Potash (NYSE:POT), Intrepid Potash (NYSE:IPI), Agrium (NYSE:AGU) Rated by Gleacher & Co

Gleacher & Co. took rating aim at some fertilizer companies, including Potash (NYSE:POT), Intrepid Potash (NYSE:IPI) and Agrium (NYSE:AGU).

All of the companies had their earnings per share raised by Gleacher, based on the assumption the companies have or will be able to increase prices in 2010 and 2011.

For Potash Corp., which Gleacher maintained a "Neutral" rating, they are expected to increase potash volume as well as have higher nitrogen and DAP prices.

Gleacher said, "We are raising our 2010 EPS to $5.44 from $5.15 and our 2011 EPS estimates to $7.30 from $6.90, primarily to reflect higher DAP and nitrogen prices, as well as higher potash volume. We maintain our Neutral rating and take-over fair value of $160 which represents 14.5X our 2011 EBITDA and 22X 2011E EPS. Risks to our price target include 1) failure of BHP and POT to come to an agreement regarding BHP's bid; 2) volatile crop prices that could dampen buyer sentiment; 3) failure of potash producers to raise prices."

The maintained their "Buy" on Agrium, also basing that on the probability of pricing power for the three major nutrients.

"We are raising our 2010 EPS by $0.02 to $5.11 and our 2011 EPS by $0.95 to $6.65 on higher nitrogen, phosphate and potash price assumptions," they said.

Concerning Intrepid Potash, they consider their valuation already high, so they downgraded them from "Buy" to "Neutral." That was even with the same reasoning they could also have pricing power for their fertilizer and higher volume too.

Gleacher noted, "We are raising our 2010 EPS by $0.08 to $0.54 and our 2011 EPS by $0.15 to $1.15 on higher potash volume and pricing assumptions, as well as higher langbeinite prices. However, at current valuations, we are no longer aggressive buyers of IPI and thus are downgrading our rating."

Intrepid also has limitations because of their regional parameters.

Gleacher Maintains "Buy" on Mosaic (NYSE:MOS), Increases EPS

Gleacher & Co. said it maintaining its "Buy" rating on Mosaic Company (NYSE:MOS), while increasing their earnings per share estimate, citing higher pricing power on growing demand for fertilizer.

"We expect MOS to report FYQ1 EPS of $0.72 (vs. prior $0.68), up 218% y/y but down 19% q/q in the seasonally slower Q1. As the year progresses, we expect the rebound in fertilizer demand to continue gaining traction and we have increased our FY2011E EPS to $3.95 from $3.60 and FY2012E to $4.55 from $3.95 on surging DAP prices and higher potash price assumption," said Gleacher.

"With supportive crop prices, tight inventories, and anticipated strong demand heading into the fall application season, the momentum has returned to the fertilizer industry. In addition, we believe the BHP (NYSE:BHP) bid for Potash (NYSE:POT) has unlocked the value of potash. We maintain our belief that investors can continue owning Mosaic heading into the fall."

Mosaic closed the week at $62.09, gaining $0.74, or 1.21 percent.

The price target on the fertilizer company was raised by Gleacher from $56 to $70.

Potash (NYSE:POT) Downgraded by Gleacher (Nasdaq:GLCH)

Potash Corp. (NYSE:POT) was downgraded by Gleacher & Co. (Nasdaq:GLCH) from "Buy" to "Neutral," saying there's not much more room to move upward, as most of the bid by BHP Billiton is already built into the share price.

"We are downgrading POT to Neutral as we believe significant upside from current levels is limited. The share price is at $146.73, 13% higher than the BHP bid of $130 as investors anticipate a higher bid from BHP (NYSE:BHP) (likely) or the emergence of a white knight (less likely)...We are adjusting our fair value to $160 per share, which represents a 10% premium to our estimated replacement value of $146," said Gleacher.

Potash is down slightly today, standing at $146.70, losing $0.14, or 0.10 percent, as of 1:16 PM EDT.