Mosaic Misses Q3 Expectations; Shares Slip 1.6%


The Mosaic Company (MOS) recorded significant year-over-year growth in its third-quarter financials. However, the results failed to meet expectations and the company’s shares fell 1.6% ̉during the extended trading session on November 1.

Mosaic engages in the production and marketing of concentrated phosphate and potash crop nutrients, and proclaims to be the largest producer of potash and phosphate fertilizers in the United States. With a market cap of $15.75 billion, MOS shares have gained 112% over the past year.

Mosaic’s adjusted earnings stood at $1.35 per share, reflecting a whopping 487% growth over the Q3FY20 adjusted earnings of $0.23 per share, yet missing analysts’ estimate of $1.54 per share.

Moreover, revenues of $3.42 billion also failed to meet Street estimates of $3.65 billion. However, Q3 revenue grew 44% compared to the prior-year quarter driven by higher pricing trends, which more than offset lower volumes.

Additionally, Mosaic repaid debt of $450 million in August, while its Board of Directors approved a 50% hike to its targeted annual dividend to $0.45 per share, expected to be declared in December 2021. (See Insiders’ Hot Stocks on TipRanks)

Commenting on the results, Joc O’Rourke, President and CEO of Mosaic, said, “Mosaic’s third-quarter results were the strongest in more than a decade, as our business continues to realize the benefits of a favorable market amplified by our transformation efforts… From the acquisition and optimization of Mosaic Fertilizantes to the acceleration of our Esterhazy K3 potash mine and the recent restart of the Colonsay potash mine, Mosaic has evolved into a business that we believe can deliver results throughout the cycle.”

Mosaic expects the upward pricing trend to continue in the fourth quarter, with higher average realized prices. Phosphate prices are expected to increase by $55-$65 per tonne and potash prices are expected to grow by $110-$130 per tonne over Q3 prices. Meanwhile, raw material costs per finished tonne are projected to be $5-$10 higher than Q3.

In response to Mosaic’s quarterly performance, Citigroup analyst PJ Juvekar downgraded the stock to a Hold rating from Buy, while maintaining the price target of $46, which implies 10.9% upside potential to current levels.

Overall, the stock has a Moderate Buy consensus rating based on 3 Buys and 4 Holds, and the average Mosaic price target of $44.43 implies 7.2% upside potential to current levels.

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