Morgan Stanley cuts Yara International target to NOK380
YARIY
-1.18%
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On Wednesday, Morgan Stanley adjusted its price target for Yara International ASA (OL:YAR:NO) (OTC: YARIY (OTC:YARIY)), a global fertilizer company, reducing it to NOK380 from NOK400 while maintaining an Equalweight rating. The firm anticipates that Yara International will report an adjusted EBITDA of $627 million for the first quarter of 2024, which is 15% higher than the consensus estimates. The consensus figures from Reuters and Visible Alpha are $547 million and $518 million, respectively.
The revised forecast by Morgan Stanley is based on several factors. The firm expects improved volumes contributing an additional $111 million, particularly in the Industrial Solutions and Americas segments. Additionally, the forecast includes the reversal of negative impacts from the first quarter of 2023, including a significant $190 million inventory write-off from the previous year.
Another contributing factor to the positive outlook is the anticipated decrease in energy costs, which are expected to be $589 million. This is despite a forecasted 30% increase in production in Europe year-over-year, which is likely to mitigate the benefits of lower feedstock prices.
Morgan Stanley also projects a free cash flow (FCF) for Yara International of $206 million for the first quarter of 2024, compared to $248 million during the same period last year. This projection includes a $20 million net working capital inflow and capital expenditures amounting to $300 million. The analysis reflects the firm’s comprehensive assessment of Yara International’s financial performance and market conditions impacting the company’s operations.
