The Nufarm Limited (ASX: NUF) share price has charged higher for a second day in a row.
In afternoon trade on Tuesday the agricultural chemicals company's shares have risen over 12% to $6.33. This means that Nufarm's shares have now jumped a massive 42% this week.
Why is the Nufarm share price charging higher?
Investors have been scrambling to buy its shares this week following the release of its full year results and the announcement of the sale of its South American crop protection and seed treatment operations.
For the 12 months ended July 31, Nufarm posted revenue of $3,758 million and underlying EBITDA of $420 million. This was an increase of 14% and 9%, respectively, on the prior corresponding period and driven by a combination of acquisitions and growth in all regions except Australia and New Zealand.
And while management's guidance for the first half was disappointingly flat, for the full year it believes the work it has "done in 2019 sets a strong base to continue to improve earnings and cash generation in 2020."
It added: "We have completed the integration of the portfolios we acquired in Europe last year and further strengthened our management and commercial teams. There is strong customer demand for the new product portfolio and the actions we have taken to increase control of the supply chain will address product availability issues we experienced in 2019 and contribute to earnings growth in 2020."
In respect to the asset sale, Nufarm has agreed to sell Nufarm South America to Sumitomo Chemical Company for $1,188 million.
This is expected to improve its balance sheet significantly and provide it with an opportunity to refocus on other areas of the business where it believes it can generate higher margins and stronger cash flow. This certainly went down well with brokers this morning, which appears to have played a key role in its share price gain today.
One broker that is particularly bullish is Morgan Stanley. This morning its analysts retained their overweight rating and lifted the price target on its shares to $7.20.
Elsewhere, Goldman Sachs has retained its buy rating and lifted its price target by 5% to $6.40 and equity analysts at Macquarie Group Ltd (ASX: MQG) have upgraded its shares to an outperform rating with a $6.56 price target. This could mean its shares still have further to run.
