On Thursday, Deutsche Bank adjusted its price target for Yara International ASA (OL:YAR:NO) (OTC: YARIY (OTC:YARIY)), lowering it to NOK 290.00 from the previous NOK 340.00, while maintaining a Hold rating on the stock. The revision comes ahead of the company's second-quarter earnings expectations, where the bank forecasts a significant year-over-year increase in earnings before interest, taxes, depreciation, and amortization (EBITDA).
The bank's analyst predicts a 90% surge in EBITDA year-over-year to $479 million for the second quarter, which is above the consensus estimates at the time of publication, which stood at $464 million according to InFront and $460 million according to Bloomberg. The anticipated improvement is attributed to various factors impacting the company's financial performance.
One of the key drivers behind the positive forecast is a substantial reduction in gas prices, which is expected to contribute a $120 million positive impact. This is set to more than offset the negative influence from lower CAN (calcium ammonium nitrate) prices. Additionally, the analyst points out that last year's second-quarter results were affected by write-downs, making the base for comparison in Q2 2023 "artificially" lower.
Moreover, Yara International is expected to report improved volumes year-over-year, which should also contribute to the EBITDA growth. The EBITDA margin for the second quarter is estimated to be 13.6%, a slight increase from the 13.2% margin reported in the first quarter of 2024, due to higher spreads.
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