Israel Chemicals (TASE: CHIM) has won another positive analyst's review, this time from Darren Shaw and Roni Biron of UBS. Shaw and Biron have raised their target price for the stock from NIS 39 to NIS 58, maintaining their "Buy" recommendation. The target price compares with a current price on the Tel Aviv Stock Exchange of NIS 51.63, up 1.79% in this morning's session.
Yesterday, IBI Investment House analyst Yuval Zehira raised his target price for the stock to NIS 60. Israel Chemicals' share price has risen more than 115% over the past twelve months.
"We believe ICL is well positioned to capitalize on the dramatic price action in the fertilizer market," Shaw and Biron write. "Potash prices in Brazil and Southeast Asia more than doubled in 2007, and substantial adjustments are expected in China and India. With no substantial increase in capacity due in the coming years, we expect more price hikes to follow.
"ICL stands out because of its access to the Dead Sea a renewable source of minerals at high concentration. This has positioned the company as the leading producer of elemental bromine and a key producer of potash. We view ICL’s access to the fast-growing markets of India, China and Brazil as another comparative advantage.
"We expect ICL’s results in 2008 and 2009 to reflect strong top-line growth and margin expansion, as new fertilizer prices gradually get into play. While wary of the increase in freight and other costs, and the appreciation of the shekel, we expect the incremental pricing to outweigh the higher expenses.
"We view ICL as an attractive vehicle into the favorable trends in the fertilizer arena. ICL is currently trading at 12.3x our 2008 estimated EBITDA a substantial discount to leading fertilizer producers. Our price target is based on the average of a 13.5x 2008 estimated EV/EBITDA valuation and a DCF model."
Published by Globes [online], Israel business news - www.globes.co.il - on January 10, 2008
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