National Bank Financial downgraded Nutrien (NYSE: NTR) to Sector Perform from Outperform on Tuesday, citing valuation concerns despite the fertilizer producer's recent stock gains.
The firm raised its price target to $77 from $74, while maintaining a cautious stance on the shares. Nutrien's stock has climbed roughly 22% year-to-date and delivered a 7% return over the past week, closing at $74.29 on Aug. 24. The shares were trading around $74 to $75 in after-hours trading following the downgrade.
Barclays maintained an Overweight rating but lowered its price target to $78 from $81. The bank also reduced its adjusted EBITDA estimates by about 6% on average for 2026 and 2027, reflecting a more conservative outlook on the company's near-term earnings trajectory.
Nutrien reported second-quarter revenue of $10.81 billion, exceeding Wall Street's estimate of $10.70 billion, but adjusted earnings per share came in at $2.61, below the forecast of $2.89. First-half adjusted EBITDA rose 6% year-over-year, while cash from operations increased 12%.
The company guided potash sales volumes for 2026 to a range of 14.2 million to 14.8 million tons. Share repurchases accelerated to approximately CAD 75 million per month in the third quarter, up from prior levels.
Valuation metrics suggest Nutrien is trading at roughly 7.0 times its 2027 estimated EBITDA, compared with 6.1 times at initiation in July. The stock's multiple sits at 7.25 times, placing it between its three-year average of about 7 times and its longer-term average since 2018 of 7.5 times. The discount to peers has narrowed to 7%, down from 16% at initiation.
The comparable group of fertilizer, chemicals, and agricultural retail companies is now trading at an average of 7.7 times 2027 estimated EBITDA, up from about 7.2 times previously. National Bank noted the average 2026-2027 free cash flow yield has declined to roughly 7% from 9% previously, while the P/E ratio stands at 14.97 and the PEG ratio at 0.19.
