Citi analysts have downgraded Makhteshim Agan Industries Ltd. (TASE: MAIN) from "Buy/High Risk" to "Hold", and lowered their target share price to NIS 24 from NIS 38.
Citi says that the downgrade can ultimately be attributed to this year's weather conditions. Adverse weather conditions in the northern hemisphere led to a late planting season, so crop spraying was reduced. Citi research shows that this has led to reduced demand in the second quarter, compared with the corresponding period of 2008.
The analysts point out, "Given the highly seasonal nature of the industry, with the second quarter usually representing at least 30% of annual sales, this weakness is unlikely to be made up in the rest of the year. In other words, it’s not just a late season this year but also a shorter one."
Citi expects demand for crop protection chemicals in 2009 as a whole to be less than in 2008.
For the second quarter, Citi sees sales falling 15% compared with the corresponding quarter. The analysts cut their earnings per share estimates for the company by 28% in 2009, and by 12% in 2010.
Published by Globes [online], Israel business news - www.globes-online.com - on June 23, 2009
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