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PotashCorp stock likely to fall: analyst

Jan 6, 2012 | 3:43 PM

A National Bank Financial analyst is warning investors to steer clear of PotashCorp in 2012.

Robert Winslow warns that the stock is likely to fall and consensus street earnings estimates are way overblown because grain is on the up.

Right now he predicts a $39.50 US price target.

“Get more supply and less demand and then it’s Economics 101. When that happens, prices of any commodity whether it’s grains or not will fall,” he said.

“So we just felt that with grains at elevated levels, there was more risk to the downside of grain prices. Ergo, with more risk to downside of for grain prices, there’s more risk to the downside of for companies like PotashCorp to see lower margins and lower sales,” said Winslow.

He admits his exact dollar prediction probably won't be bang on, but maintains the trend will be true.

Bloomberg is also reporting today that PCS is extending some planned production cutbacks. It's including it's Allan mine in a month-long shut-down that was already set for Rocanville and Lanigan.

The Allan mine's four-week shutdown will begin Feb. 4, when the Rocanville mine shutdown has completed. The Lanigan mine is slated for an eight-week shutdown starting on Sunday.

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