UBS today raised its recommendation for agrochemicals manufacturer Makhteshim Agan Industries Ltd. (TASE: MAIN) to "Buy" from "Neutral", but cut the target price to NIS 18 from NIS 19. Makhteshim's share price jumped 4.6% in morning trading on the news to NIS 13.57, giving a market cap of NIS 6 billion.
UBS analyst Roni Biron called Makhteshim's acquisition of US rival Albaugh Inc. "a transformational event, which should boost the company's market reach in North America and South America and offer much needed flexibility in optimizing its cost base and working capital. The deal solidifies Makhteshim’s position as the largest generic player and turns it into the sixth largest agrochemical player with annual sales of around $3 billion and a global footprint."
Biron expects the acquisition to double Makhteshim’s share of the global glyphosate market from 10% to 20%.
However, he also cut his earnings before interest, taxes, depreciation and amortization (EBITDA) forecast for the company by 10% due to expect growing pricing pressures and adverse weather conditions.
Biron predicts that Makhteshim will post a net profit of $84 million on $2.37 billion revenue in 2010 and a net profit of $126 million on $3.31 billion revenue in 2011.
Published by Globes [online], Israel business news - www.globes-online.com - on July 8, 2010
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