Morgan Stanley07/07/20201Overweight$4.90 23.74%COMMENTARYMorgan...

Morgan Stanley	07/07/2020	1	Overweight	$4.90	23.74%
COMMENTARY Morgan Stanley expects Nufarm’s planted area for the winter crops to increase by 23% to 22.5mha, which is 5% above the 10-year average. Above-average rains forecasted in NSW and QLD will also imply better seasonal conditions in Australia. North America and Europe remain challenging at the moment, with Turf and Ornamental (T&O) business margins impacted by a combination of rainfall deficit in key areas of Europe and the pandemic. The broker notes potential upside from the Omega-3 opportunity with the FDA approval providing a positive catalyst in the months to come. FY20 operating income estimates decreased by -11% to $331m while earnings are expected to grow at a compounded annual rate of 15% in FY21-23 with dividends resuming in FY21. Morgan Stanley rates the stock as Overweight with the target price decreasing to $4.90 from $5.60. Industry view: Cautious.
Ord Minnett	07/07/2020	3	Hold	$4.70	18.69%
COMMENTARY Nufarm will cease manufacturing insecticides and fungicides at Laverton. An annualised EBITDA benefit of around $5m is expected from the first half of FY22. The company is also curtailing herbicide manufacturing at Linz in Europe which will generate a $10m benefit from the first half of FY21. In other news, the US Department of Agriculture lowered estimates for planted acreage, which should benefit nitrogen producers, Ord Minnett points out. The broker retains a Hold rating and lowers the target to $4.70 from $4.95. This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Credit Suisse	01/07/2020	1	Outperform	$6.74	70.20%
COMMENTARY Nufarm has guided to $15m in operating earnings (EBITDA) improvement with the closure of manufacturing at Raymond Road and 2, 4-D synthesis at its site in Austria. Credit Suisse believes the decision recognises the reality of sub-scale manufacturing positions. The Raymond Road plant has operated below nameplate even in normal seasonal conditions. The broker retains an Outperform rating and $6.74 target.