KeyBanc lifts FMC Corp. shares target on earnings optimism By Investing.com

On Wednesday, KeyBanc Capital Markets adjusted its outlook on FMC Corporation (NYSE:) shares, a major player in the agricultural solutions industry, by increasing its price target to $81 from $79, while maintaining an Overweight rating on the company’s stock.

The adjustment reflects a heightened conviction in the company’s performance over the next 12 to 18 months, following the first-quarter earnings report.

KeyBanc’s analysis indicates that FMC is on the verge of a positive shift in EBITDA as early as the second quarter. The firm’s analysts predict that FMC’s EBITDA will rebound to approximately $1.25 billion from the current $985 million. This forecast is based on the improved clarity regarding customer orders as excess inventory levels decrease.

The firm noted that the stabilization of price erosion at a mid-single-digit level is a positive sign for net margin gains, especially as costs are also on the decline. The efforts by FMC to increase production and reduce fixed costs are contributing to margin improvements through enhanced absorption of fixed costs.

FMC’s management has reported early signs of increased orders in North America and Europe, and heightened customer engagement and orders in Brazil, reinforcing confidence in the company’s volume growth for the second half of 2024.

Despite the fact that a significant increase in volumes from the current low point has not yet been observed, the expectation for global growth (excluding Asia) starting in the second quarter is viewed positively by KeyBanc.

The firm reiterated its Overweight rating on FMC shares, citing stronger earnings prospects as the primary reason for the increased price target. The comprehensive analysis by KeyBanc underscores the potential for FMC to exceed its projected EBITDA as the company navigates through the current market conditions.

InvestingPro Insights

Following KeyBanc Capital Markets’ updated outlook on FMC Corporation, the latest data from InvestingPro provides additional context on the company’s financial health and market performance. FMC’s market capitalization stands at a robust $8.28 billion, with a notably low P/E ratio of 7.42, suggesting that the stock may be undervalued relative to its near-term earnings growth potential. This is further supported by the adjusted P/E ratio for the last twelve months as of Q1 2024, which is even lower at 6.32.

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