Mosaic (MOS) Needs to Show That Earnings Will Grow Again

The Mosaic Company (NYSE: MOS) is trading higher today ahead of its second quarter earnings release, expected after the market closes on Monday, January 4, 2010. Shares are up 0.5% to $60.06, a $0.30 rise.

Mosaic shares have seen a 58% growth from January 1, 2009 to November 30, 2009. MOS also has gained 12.5% through Q210, and is up 74% YTD. The Chemical Manufacturing industry, as a comparison, has gained 73.7% YTD.

Mosaic is expected to see revs of $1.68 billion and an EPS of $0.35 for Q210. Recently, Mosaic reported Q110 EPS of $0.23 and revs of $1.46 billion, both below estimates. For Q209, Mosaic had an EPS of $2.15 (with a $1.03 gain) and revs of $3 billion.

Bloomberg data has 8 analysts with a Buy rating on MOS, 9 have a Hold, and 2 have a Sell. Analyst consensus price is $65.

HIGHLIGHTS THROUGH Q210
Rumors of a potential takeover by Vale (NASDAQ: VALE) or BHP Billiton (NYSE: BHP) in September amounted to nothing, but CEO James Prokopanko said that there "could understand interest" in the company.

The USDA saw a strong growing season due to drier, warmer weather.

Finally, in November, Mosaic announced that it was going to realign its business segments.

ANALYST OPINION
Citi downgraded Mosaic to Hold from Buy, and lowered its price target on the company to $54 from $62. Citi saw weaker-than-expected potash applications in the fall. Also, they note that Chinese contract delays might create price risk, and falling farmer incomes (38% Y/Y) keep them on the fence about spending for more fertilizer.

Soleil downgraded MOS to Hold from Buy, and cut thier price target from $65 to $56. The firm cites a delay in the recovery for KC1 in the near-term and for FY10. Soleil reduced their FY10 EPS estimate from $4.90 to $3.27. At the end of November, the firm called fertilizer stocks "over-valued," and recommended to take profits now. They now have a price target of $51 on MOS.

In October, RBC Capital initiated coverage on MOS with an Outperform and price target of $63.

Dahlman Rose started MOS with a Hold

Credit Suisse initiated MOS with a Neutral rating and $110 price target.

Canaccord Adams reiterates a Buy on Mosaic and a price target $63. Canaccord didn't believe that the issuance of a special dividend would impair the balance sheet.

Mosaic will issue its Q210 results via press release at approximately 4:00 PM (EST) on January 4, 2010. Stay tuned to StreetInsider.com's Earnings section to see our analysis of the highly-anticipated quarterly results within seconds of their release.

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