Morgan Stanley Raises Mosaic (MOS) Target as Potash Outlook Improves for 2026

Core Viewpoint - The Mosaic Company (NYSE:MOS) faces a challenging near-term outlook due to a significant drop in fertilizer demand in North America, impacting sales and cash flow, despite a positive long-term potash price forecast from Morgan Stanley [2][3]. Group 1: Price Target and Market Outlook - Morgan Stanley raised its price target for Mosaic to $35 from $33, maintaining an Equal Weight rating, citing improved potash market conditions for 2026 [2]. - The firm expects potash prices to rise moderately in 2026, supported by a tight global market with effective capacity utilization above 90% until at least 2028 [2]. Group 2: Demand and Sales Performance - Mosaic reported a sharp decline in fertilizer demand in North America during Q4, leading to a 4% drop in stock price following the announcement [3]. - The company indicated that many farmers reduced fertilizer usage due to tighter budgets, and early winter limited the application window, particularly affecting phosphate products [4]. - North American phosphate shipments fell approximately 20% year-over-year, while potash demand remained relatively stable [4]. Group 3: Volume Expectations - Mosaic's Q4 phosphate sales were about 1.3 million tonnes, below the forecast of 1.7 to 1.9 million tonnes, while potash sales were around 2.2 million tonnes, also below the prior range of 2.3 to 2.6 million tonnes [5]. - For the full year 2025, Mosaic reported sales volumes of roughly 9 million tonnes, indicating flat performance year-over-year amidst a broader market downturn [7]. Group 4: Regional Challenges - The Brazilian market presented challenges due to tighter credit conditions and increased competition, which pressured demand and margins, particularly from lower-analysis phosphate imports from China [6].