BofA Securities downgraded Mosaic (NYSE: MOS) to Neutral from Buy and lowered its price target to $30 from $33, citing delays in expected margin expansion for phosphate fertilizers. Shares fell more than 6% intra-day Friday.
The firm said that while it remains constructive on phosphate pricing over the long term, rising input costs—particularly sulfur and ammonia—have created a more challenging profitability environment amid geopolitical tensions involving Iran.
BofA noted that elevated capital expenditures are expected to constrain cash flow for an additional year, delaying the anticipated earnings inflection.
Although spot margins had been poised to improve, the onset of geopolitical conflict has disrupted that trajectory, pushing the margin recovery timeline into 2027.
The firm added that while it maintains a bearish long-term outlook on ammonia, it expects sulfur demand destruction to eventually drive prices lower. However, this scenario depends on the continued operation of key shipping routes such as the Strait of Hormuz.
In the near term, both ammonia and sulfur prices could experience upside pressure due to ongoing conflict and disruptions to energy infrastructure, which could keep shares rangebound until clearer conditions emerge.
