We are retaining our Outperform recommendation on Agrium, Inc. (AGU) following its strong second-quarter 2012 results. Adjusted earnings of $5.43 per share topped the Zacks Consensus Estimate of $5.36, while profit surged 20% year over year to a record level. Revenues spiked roughly 10% on the back of strong demand for all crop input products.
Agrium stands to benefit from high crop prices and overall strong fundamentals for the agriculture and crop input market. The acquisition of AWB has expanded the company’s retail division and provided access to the growing Southeast Asia market. We expect strong global demand for fertilizers and seeds to boost Agrium s results in 2012.
Our long-term Outperform recommendation on the stock indicates that it should exceed the broader market. Our price target of $119 is based on 11.9x our fiscal 2012 earnings estimate
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