Why CF Stock Is Sinking Today

Fertilizer maker CF Industries (CF) is dropping 7% today after JPMorgan downgraded the stock to Underweight from Neutral. The bank expects CF to be hurt by higher natural gas prices and weak nitrogen-based fertilizer prices.

Natural Gas Prices and Nitrogen Prices

Natural gas prices are likely to rise in America, JPMorgan analyst Jeffery Zekauskas warned. According to the American Gas Association, “Natural gas is required to produce nitrogen, a main fertilizer component.” Meanwhile, the prices of nitrogen-based fertilizers are likely to remain flat at best, the analyst believes.

A farmer carrying a bag of fertilized over his shoulder signifying the fertilizers the company produces.

As a result of these factors, Zekauskas expects analysts’ average 2025 and 2026 estimates for CF to drop, and he predicts that the firm will have trouble increasing its EBITDA. What’s more, he does not expect the multiple of CF stock to climb going forward.

Other Issues Can Weigh on CF Stock

This year’s corn crop could increase versus 2024, putting downward pressure on corn prices, Zekauskas believes. Finally, geopolitical and trade issues could also hurt farmers, he stated.

More Information About CF Stock

Analysts on average expect CF’s earnings per share to fall to $5.78 this year from $6.38 in 2024.

In the last month, CF rose 4%, while it has advanced 6% in the last three months.

While we acknowledge the potential of CF, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CF but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.