Mosaic's stock price plummets after Bank of America downgrades its rating, with profit margin prospects looking concerning

Investing.com – Bank of America Securities has downgraded Mosaic Company (NYSE:MOS) from Buy to Neutral and lowered its target price from $33.00 to $30.00. The company’s stock fell 6.6% on Friday.

Bank of America Securities analyst Steve Byrne downgraded this fertilizer producer, citing delayed phosphorus fertilizer profit margin expansion. The analyst noted that, due to challenging market conditions, profit margin expansion could be postponed by a year.

The analyst commented, “We are downgrading MOS from Buy to Neutral because phosphorus fertilizer profit margin expansion may be delayed by a year. We remain optimistic about phosphorus fertilizers and expect prices to stay at higher levels over time, but the Iran conflict is pushing up raw material prices (mainly sulfur and ammonia), creating a difficult environment for profit growth.”

The analyst pointed out that high capital expenditures and an unclear profit turning point could lead to stock price fluctuations until market conditions improve. Bank of America Securities highlighted that the Iran conflict is causing inflationary pressures on key raw materials including sulfur and ammonia, hindering profit margins.

The analyst added, “Due to cash flow being hindered by another year of high capital spending and an unclear profit turning point, we expect the stock to fluctuate within a range until better conditions emerge. This means profit margin expansion is more likely a story for 2027, so we are waiting for clearer signals.”

The analyst has a long-term bearish outlook on ammonia and expects declining sulfur demand to push prices lower. However, he noted that ongoing conflicts and their impact on energy infrastructure could lead to short-term increases in both commodities.

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