Newly formed fertilizer giant Nutrien gets top marks from analysts

Shares in newly formed Canadian fertilizer giant Nutrien Ltd. rose on its second day of trading Wednesday after CIBC assigned it an "outperformer" rating and set a 12-month price target of $62 US.

The bankwhich had been restricted from comment because it had acted as an adviser to Calgary-based Agrium Inc. leading up to its merger with Potash Corp. of Saskatchewan Inc.said in a report from analyst Jacob Bout that Nutrien has likely been "sandbagging" its estimate of $500 million US in cost-saving synergies from the deal.

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The research note says there are possibly $100 million US in incremental savings that will be realized if the new company doubles its retail footprint growing to grab a third of the U.S. market compared with about 19 per cent nowand more if it successfully rationalizes its wholesale operations.

The report says it could realize $125 million US in additional cost savings by reorganizing its potash assets. Along with about $5 billion US in proceeds from selling equity investments, the savings should allow the company to return cash to investors through sharebuybacksand dividends.

The shares, which started out at $52.25 US on Tuesday in New York, rose to $55.18 US by 2 p.m. ET on Wednesday on the New York Stock Exchange.

According to Thomson Reuters, Laurentian Bank Securities and Bernstein rateNutrien"buy" and "outperform," respectively, whileBMOassigned it a "market perform" rating.

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