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Buy fertilizer stocks Corteva and Nutrien as supply challenges loom beyond 2023, Barclays says

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Fertilizer and agricultural supply stocks will continue to get a boost from supply challenges that last beyond 2023, according to Barclays. Analyst Benjamin M. Theurer initiated research coverage of Corteva and Nutrien with overweight ratings, saying in a Wednesday note that demand will remain strong for agricultural products. “We see lasting supply/demand tightness beyond 2023, which bodes well for the broader group despite recent outperformance against major indexes,” the analyst wrote. Corteva has a crop protection business that will get a boost as farmers increasingly try to shelter their crops. It is the only company the analyst is initiating coverage on that Barclays expects will expand earnings per share in 2023 compared to 2022. “Given the lower levels of volatility yet a constantly growing business, and its high value of proprietary seed germplasm, we see CTVA as an attractive way to gain exposure to the broader agriculture complex, without risking too much downside volatility as certain tightness in the ag markets eases,” Theurer wrote. Barclays assigned a $71 price target to Corteva, about 13% above where shares closed Tuesday. Nutrien is a “best-in-class” operator that will continue to generate steady earnings from its retail business, analysts said. Barclays assigned a $116 price target that is 19% above where shares closed Tuesday. Barclays initiated coverage of three other fertilizer and agricultural supply stocks. CF Industries and ICL Group were assigned equal-weight ratings, and Mosaic Company was given an underweight rating. –CNBC’s Michael Bloom contributed to this report.

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