Potash Corporation (POT) recorded strong second-quarter 2011 net earnings of $0.96 per share, up 81% from $0.53 in the prior-year quarter and well ahead of the Zacks Consensus Estimate of $0.86. Revenues increased 61.8% year over year to $2,325 million, driven primarily by higher nutrient prices.
Rising demand for food grain from emerging economies and adverse weather have pushed grain prices to record levels, boosting fertilizer prices. The scarce supply of potash is another factor for the rise in demand, and the company has already started preparing to meet this demand by investing in its ongoing potash operational capability. Potash Corp. expects to spend $1.6 billion on
potash expansion projects.
It raised its full-year earnings forecast to between $3.40 and $3.80 a share, instead of $3.00 to $3.40. We have thus upgraded our recommendation to Outperform from Neutral with a target price of $63.00.
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