DE - BAML thinks Ag supply chain has run too far - downgrades ADM and BG
With droughts and war sending agricultural commodities to near record highs, anything touching the sector has outperformed in 2022. Fertilizer names like CF Industries (CF) and Mosaic (MOS) hit record highs, as have OEMs like Deere (DE) and producers like Gladstone (LAND). Processors and distributors including Archer (ADM) and Bunge (BG) have also benefitted, but Tuesday, Bank of America downgraded the two names, following 44% and 33% year-to-date share price appreciation, respectively. The bank is not bearish, it forecasts above consensus earnings through 2024. Bank of America also raised price targets for the two names Tuesday. However, peaking crush margins on the back of elevated food prices from sustained, high fertilizer costs are not to be ignored, in the bank's view. Further, rail disruptions could impact fertilizer availability and eventually US crop yields, which would pressure merchandizing volumes for the two companies. Finally, the bank sees risk to "food vs
For further details see:
BAML thinks Ag supply chain has run too far - downgrades ADM and BG