Thomas Weisel Partners Gives CF Insutries MarketWeight Rating (CF)

After yesterday's market close, CF Industries (NYSE: CF) reported net sales of $502 million in the first quarter of 2010. This number was a modest miss of Thomas Weisel Partners' estimate of $516 million and well below consensus estimates of $560 million. CF also announced that it has commenced a public offering of common shares which is expected to raise around $1.153 billion. This transaction will be dilutive to current shareholders, but also will lower CF's leverage which is a positive development.

In the report issued by Thomas Weisel Partners, the analysts wrote that "directionally, the risk is on the downside." They said that "we acknowledge CF has yet to release its full results for the quarter, and those of Terra Industries, so it is not yet known if the aforementioned revenue shortfall will be offset by a corresponding reduction in operating costs. Nevertheless, the risk has grown that our $1.365 billion estimate for EBITDA in 2010 for the combined entity is too high." As a result, Thomas Weisel is maintaining their MarketWeight rating on the shares. The firm does have a $110 price target on the stock, however, which suggests that there is some potential upside in CF.