Now could be the time to buy the ASX 200 stock in this article.
That's the view of analysts at Bell Potter, which have just upgraded its shares.
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Which ASX 200 stock?
The stock in question is Nufarm Ltd (ASX: NUF).
It is a leading supplier of off-patent agricultural chemicals, seeds, and seed treatments globally with a marketing presence in over 30 countries and sales in over 100 countries.
According to a note out of Bell Potter, its analysts have responded positively to Nufarm's annual general meeting update this week.
Key takeaways from the meeting according to the broker are:
(1) NUF noted a "pleasing start" to FY25e with strong levels of demand for crop protection products; (2) NUF remains on track to deliver $100m in Omega-3 revenues in FY25e, continues to target $50m in cost savings (full realisation in FY26e); and (3) NUF remains on track to reduce working capital by 25-days by year end. At 1H25e, NUF expects net working capital to be marginally higher than the prior year, mainly due to additional working capital for omega-3 and movements in currency.
And while not a lot is known about current trading conditions, Bell Potter is feeling positive. It adds:
We are not yet in peak selling windows for most NUF markets and in somewhat of an information vacuum. However, at a high level we would make the following comments: (1) Europe benefited from a prolonged sowing window and initial yield projections are for a ~6% YOY uplift in grain and oilseed production in 2025; (2) US corn and soybean production forecasts have been pairing downwards in recent USDA reports, with dry conditions in some key regions; and (3) Australia should be benefiting from a more normal summer purchasing program than a year ago.
Time to buy
The note reveals that Bell Potter has upgraded the ASX 200 stock to a buy rating with an improved price target of $4.35 (from $4.25).
Based on the current Nufarm share price of $3.68, this implies potential upside of 18.2% for investors over the next 12 months.
In addition, a modest 1.6% dividend yield is expected in FY 2025, growing to 3% in FY 2026.
Commenting on its upgrade, Bell Potter said:
We upgrade from Hold to Buy. Our upgrade is predicated: (1) NUF's discount to global peers, which has widened in recent months (from ~13% at FY24 results to ~25%); (2) a bottoming trend in export values ex-China reversing some of the pricing headwinds of FY24; (3) we expect NUF and peers to commence cycling softer YOY comparisons from 1Q25; and (4) little or no value ascribed for the upside in Beyond yield initiatives.
