--> POT -4.27% Pre-Market
Potash target lowered to $32 at Miller Tabak -- Effective tax hike + lower-than-expected Chinese potash contract cuts FY16 potential
Miller Tabak lowers their POT tgt to $32 from $36; they cut FY:16E by $0.10sh, which incorporates a $0.06sh hit from the new Saskatchewan tax guidelines for the treatment of capital expenditures plus news of a potential H1:15 Chinese potash price contract. The valuation case for shares of POT is not only impacted by a reduced earnings outlook but also from the negative implications of a sudden change in the government's approach to the potash mining sector. They could see shares trade into the $30-31sh range (implied forward dividend yield of 5%) if investors demand greater yield protection in light of weakening potash fundamentals and shifting Canadian tax policy.