Mosaic Stock Gets High-Profile Upgrade After Earnings

One options trader lifted their expectations, too

by Karee Venema

Published on Feb 21, 2018 at 9:42 AM

Mosaic Co (NYSE:MOS) reported better-than-expected fourth-quarter earnings on Monday night, citing higher potash and phosphate prices. The fertilizer firm also upped its full-year earnings forecast, sending MOS shares up 5.2% on Tuesday. The stock is up another 2.4% today to trade at $27.40, after grabbing several post-earnings bullish brokerage notes.

Most notably, J.P. Morgan Securities raised its rating to "overweight" from "neutral," and its price target to $30 from $26, listing several catalysts that could tighten the phosphate market this year -- including decreasing production in the U.S. and China. Piper Jaffray, RBC, and BMO also lifted their MOS price targets.

This upbeat outlook from analysts runs counter to the withstanding trend, with 14 of 15 covering brokerage firms maintaining a "hold" or "sell" rating at last night's close, and the average 12-month price target of $28.30 resting a slim 5.8% above current trading levels.

However, analysts weren't the only ones lifting their expectations for Mosaic following the stock's post-earnings pop. Roughly 15,000 MOS calls changed hands yesterday, with some of the action dedicated to a bullish roll. Specifically, it looks like one trader sold to close June 27 calls to purchase new positions at the June 30 strike.

While the stock hasn't traded north of $30 since last March, it came close to this round level when it topped out at a recent high of $28.30 on Jan. 29. Mosaic shares subsequently pulled back to -- and bounced from -- the $23.75 region, a 50% Fibonacci retracement of their surge from September through January, and are now trading back above familiar support at their 30-day moving average.

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