Analyst Actions: Credit Suisse On Potash Corp - Pre Dividend Increase News

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Stabilizing Price Efforts Yielding Positive Price Momentum: "We believe recent management commentary regarding a more stable approach to pricing is certainly an incremental positive for potash markets going forward. In our view, recalibrating the approach to pricing strategy in order to avoid large swings in price should result in a more fluid market, likely leading to less volatility in volumes (the reverse of 2H12). We would also note that preliminary news of price increases in SE Asia (for 3Q13) at a minimum is a slight positive, as it should alleviate some concern over 2H pricing levels."

Bring on the Cash Catalysts - Tortoise and the Hare of Expectations: "While the buyback potential for POT is inherently smaller than MOS' due to company specific factors, in our view it remains relatively underappreciated. We stress improvements in op. free cash flow, significant yr/yr reductions in capex over during each of the next ~3 years and the likely ability to carry a slightly higher leverage ratio going forward nets a large potential catalyst."

Global Market Exposure versus Late Plantings in N. America: "Late planting in N. America could result in 2Q regional volumes being trimmed, but we believe global demand is more than enough to offset this evidenced by momentum in Latin America and a recent pick-up in SE Asia. We would note that the US remains the unknown for 2Q, as concerns over late planting in China and Europe have now abated due to more favorable weather."

Don't Underestimate the Average Cost Per K Tonne Reduction: "As pricing expectations have now adjusted to the new demand dynamic, we note improvements in volumes should lead to further reductions in the avg. cost per tonne on a sequential basis, netting out scheduled downtime."



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Commodities

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