Citigroup has raised its price target for Makhteshim Agan Industries Ltd. (TASE: MAIN) to NIS 40 from NIS 35 and reiterated its “Buy” recommendation, citing the company’s growing market share, probable continued increase in sales for the second quarter, and positive indications for the second half of the year.
Citigroup says, “With market conditions in Europe and South America (two-thirds of group sales) strong and all evidence pointing to market momentum being sustained into the second quarter of 2007, it is likely that sales will have risen by a similar level to the first quarter, indicating some growth in market share.”
Citigroup continues, “Strong cash generation (working capital reduction) and a high level of pre-season demand in South America have been noted by Makhteshim Agan’s key peers. We would expect Makhteshim Agan to see a similar picture. This bodes very strong demand growth in the second half.”
In addition, “Restructuring seems to be on track. The company noted in the first quarter that no benefits were delivered from its $100 million cost-cutting efforts. In the second quarter, the redundancy program was implemented (likely savings of about $20 million) and purchasing reorganization begun. This should ensure savings are seen in the fourth quarter.”
Citigoup raised its earnings per shares forecast for Makhteshim Agan to $0.46 from $0.43. The bank predicts that the company will post a net profit of $200.3 million on $1.98 billion revenue in 2007 and a net profit of $252.4 million on $2.09 billion revenue in 2008. The bank kept its earnings per share forecast for 2008 at $0.58.
Published by Globes [online], Israel business news - www.globes.co.il - on August 1, 2007
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