HSBC Global Research today raised its price target for Israel Chemicals Ltd. (TASE: ICL) to NIS 100 from NIS 66 and reiterated its "Overweight" rating for the share. HSBC analyst Yonah Weisz says, "Thousand-dollar potash is here to stay."
HSBC's target price reflects a premium of 51.5% on today's opening price. The new target price is the latest in a series of record-setting target prices for the share set by various analysts. Israel Chemicals corrected downwards yesterday by 4.7% to NIS 64.98, but rose 2.7% in morning trading to NIS 66.71.
Weisz says, "Demand for food is soaring, causing prices to rise as well. We believe that this trend, driven by the developing world, should stay with us for some time. With grain inventories falling and planted areas not large enough to supply growing food demand, farmers are using more chemical input to boost yields of the crops they plant."
The previous record price target for Israel Chemicals was set at NIS 85 just last week by UBS. To explain the new price target, HSBC conservatively predicts an average price of $600 per ton for potash in 2008 and $930 per ton in 2009. It predicts that India and China will pay $850 per ton for potash delivered in 2009 and that the rest of Asia will pay $1,000 per ton.
HSBC predicts that Israel Chemicals will post a net profit of $1.8 billion on $6.63 billion revenue in 2008 and a net profit of $3.25 billion on $8.61 billion revenue in 2009.
Published by Globes [online], Israel business news - www.globes-online.com - on April 28, 2008
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