Northbrook, Illinois-based CF Industries Holdings, Inc. (CF) manufactures and sells hydrogen and nitrogen products for energy, fertilizer, emissions abatement, and other industrial activities. Valued at a market cap of $14.8 billion, the company’s principal nitrogenous fertilizer products are ammonia, granular urea, urea ammonium nitrate solution, and ammonium nitrate.
Shares of this agricultural inputs company have lagged behind the broader market over the past 52 weeks. CF has gained 9% over this time frame, while the broader S&P 500 Index ($SPX) has soared 20.7%. Moreover, on a YTD basis, the stock has marginally declined compared to SPX’s 3.2% rise.
Narrowing the focus, CF has outpaced the Materials Select Sector SPDR Fund’s (XLB) 7.4% return over the past 52 weeks but has underperformed XLB’s 6.1% gain on a YTD basis.
On Jan. 24, CF closed down 7.5% after JPMorgan Chase downgraded the stock to “Underweight” from “Neutral” with a price target of $75. The downgrade was driven by expectations of rising domestic natural gas prices, CF’s primary raw material, which could lead to downward revisions in the company’s consensus earnings estimates for 2025 and 2026.
Nonetheless, on Oct. 30, CF’s shares increased marginally after reporting better-than-expected Q3 results. Its EPS of $1.55 surpassed Wall Street expectations of $1.05 and advanced 82.3% year-over-year. Moreover, its revenue of $1.4 billion topped Wall Street forecasts by 12.8% and climbed 8% from the year-ago quarter. Higher prices for nitrogen fertilizers in the quarter aided the results.
For the fiscal year, which ended in December, analysts expect CF’s EPS to decline 21.4% year over year to $6.31. The company’s earnings surprise history is mixed. It surpassed the Wall Street estimates in two of the last four quarters while missing on two other occasions.
Among the 15 analysts covering the stock, the consensus rating is a “Hold,” which is based on five “Strong Buy,” seven “Hold,” one “Moderate Sell,” and two “Strong Sell” ratings.
On Jan. 27, Piper Sandler maintained an “Overweight” rating on CF and raised its price target to $115, which is also the Street-high target. This newly raised target indicates a notable 35.2% potential upside from the current levels. The mean price target of $93.50 represents a 9.9% upside from CF’s current price levels.
