Merrill Lynch has reiterated its "Buy" recommendation for Israel Chemicals Ltd. (TASE: ICL) and target price for the share to NIS 90, 40% above the share's current price of NIS 67.50. The investment bank says that the company's bullish market conditions are intact.
Merrill Lynch says, "Fertilizer market fundamentals continue to improve and Israel Chemicals is well positioned to enjoy current trends. On top of benefiting from the strong pricing power still prevalent in the industry, for the first time since 2004, Israel Chemicals is no longer a pure price play. The company’s recently announced significant capacity increases in its key activities to reduce its overall sensitivity to prices."
Merrill Lynch adds that two recent supply contracts indicate that potash prices are stabilizing at over $1,000 per ton. The investment banks adds that since costs at Israel Chemicals have risen 22% compared with last year, the higher prices could result in Israel Chemicals not only meeting the investment bank's forecasts for 2008 and 2009, but exceeding them.
Merrill Lynch predicts that Israel Chemicals will post a net profit of $1.88 billion on $6.5 billion revenue in 2008 and a net profit of $3.22 billion on $9.15 billion revenue in 2009.
Published by Globes [online], Israel business news - www.globes-online.com - on July 17, 2008
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