Markets

Analyst Actions: Scotia Capital Lifts Rating, Target Price on Karnalyte

A pen and a calculator.
Credit: Shutterstock photo

Scotia Capital has issued a new analyst report on Karnalyte Resources. It said:

Event: "According to the Globe & Mail, KRN has reached an agreement with an Asian partner that will see 19.98% of the company sold at $8.15/sh, or at a 2% premium to yesterday's closing price. Note that KRN was up 9% yesterday, and is 30% higher over the past month, while WPX is flat to down over the same period. The article suggests that a subsequent equity injection of $15M will occur in the next year or so. Additionally, the partner will buy potash from KRN at market prices over the next 20 years."

Implications: "We applaud KRN management for attracting a partner to an unconventional project, in a region with a substantial net surplus and a stranglehold by one effective player that will likely have material economies of scale, in a difficult financing environment, and in a potash industry that is clearly becoming a buyer's market."

Recommendation: "We have upgraded KRN to Sector Outperform, and have raised our NAV multiple to 0.5x NAV from 0.3x NAV. Our revised target price is $12.50,

up from $7.00 previously."

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

Copyright (C) 2016 MTNewswires.com. All rights reserved. Unauthorized reproduction is strictly prohibited.


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

Other Topics

Commodities

Latest Markets Videos

    MTNewswires

    Founded in 1999, MT Newswires (formerly known as Midnight Trader) is a leading provider of original source, multi-asset class, real-time, global financial news and information to most of the largest banks, brokerage firms and professional market data, trading & research applications in North America.

    Learn More