FMC Corporation

FMC Details

FMC Corporation (NYSE: FMC) operates as an agricultural sciences company that provides crop protection, plant health, and pest and turf management solutions to growers through a broad product portfolio. FMC is engaged in developing, marketing, and selling three types of crop protection chemicals: insecticides, herbicides, and fungicides. Its products enhance crop yield and quality and pest control in agricultural and non-agricultural markets. As of October 07, 2021, the company’s market capitalization stood at USD 11.53 billion.

Favorable Ruling in Patent Infringement Case: On September 13, 2021, FMC announced that China's Qingdao Intermediate Court sided with the company in the chlorantraniliprole patent infringement suit against Shandong Weifang Rainbow Chemical Co. Ltd. (Rainbow). In its verdict, the Court ordered Rainbow to stop manufacturing, selling, and using chlorantraniliprole, an active insecticidal ingredient, and compensate FMC for related damages.

Quarterly Dividend: On July 15, 2021, the company declared a quarterly dividend of USD 0.48 per common share, payable on October 21, 2021, to shareholders of record on September 30, 2021.

Q2FY21 Results: The company reported YoY growth of 7.50% in total revenues to USD 1.24 billion in Q2FY21 (ended June 30, 2021) compared to USD 1.16 billion in Q2FY20, attributable to higher volumes and favorable foreign currency impacts. Net income for Q2FY21 increased to USD 202.9 million from USD 184.4 million in Q2FY20. As of June 30, 2021, the company had cash & cash equivalents of USD 728.5 million and total debt of USD 3.82 billion.

Key Risks: FMC operates in the agricultural industry, which is vulnerable to weather and seasonal factors, reducing the demand for its products. In addition, unfavorable movement in the cost of commodities, both chemical raw materials and the harvested crop, could impair its financials.

Outlook:

Earnings Outlook (Source: Earning Presentation, August 04, 2021)

Valuation Methodology: Price/Earnings Multiple Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

FMC Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: FMC's stock price decreased 26.26% in the past nine months and is currently leaning towards the lower band of its 52-week range of USD 87.27 to USD 123.66. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 37.06. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 112.31. Considering the significant correction in the stock price, decent profit margins, current valuation, and associated risks, we recommend a "Buy" rating on the stock at the closing price of USD 89.87, up 0.31% as of October 07, 2021.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

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