UBS has raised its target price for Makhteshim Agan Industries Ltd. (TASE: MAIN) to NIS 39 per share from NIS 37, and reiterated its "Buy" recommendation for the generics agrochemicals maker. Analysts Darren Shaw and Roni Biron predict "stellar growth" for the second quarter, on the basis of industry peers, and say that its forecast of 18% top-line growth "appear understated."
Makhteshim Agan rose 2.4% to NIS 33.80 by early afternoon, giving a market cap of NIS 14 billion.
Based on the first quarter results of Syngenta International AG (NYSE:SYT; SWX:SYNN) and Bayer AG (EXTRA; BAY; LSE: BYR), caused by strong demand, which was compounded by early-buying, higher selling prices, and favorable currency impact, UBS now predicts 25% growth for Makhteshim Agan for the second quarter, and adds that the company could exceed this new estimate. UBS has raised its earnings per share forecast to $0.18 from $0.17 to reflect a one-off charge of c$14 million related to IFRS.
UBS is also cautiously optimistic for the year as a whole. It says, "While first quarter performance should not be viewed as indicative for future quarters, we are encouraged by the underlying spending trends in the sector. We note that crop-protection constitutes one of the smallest components of farmers’ costs (7-8%), and generates particularly high returns at current crop prices. That said, we continue to closely monitor oil prices as well as other exogenous factors." For the year as a whole, the investment bank has raised its revenue growth estimate to 17% from 13.4%, and increased its earnings per share estimate to $0.49 from $0.47.
UBS predicts that Makhteshim Agan will post a net profit of $218 million on $2.42 billion revenue in 2008 and a net profit of $260 million on $2.59 billion in 2009
Published by Globes [online], Israel business news - www.globes-online.com - on May 6, 2008
© Copyright of Globes Publisher Itonut (1983) Ltd. 2008