Agrium plunges 6 pct, fertilizer rivals also lower
* Fertilizer names downgraded despite strong H1 view * Agrium Q4 EPS beat, but was lower on adjusted basis * Potash Corp, Mosaic, CF shares also weaker By Rod Nickel Feb 22 (Reuters) - North American fertilizer stocks fell in early trading on Friday, led by Agrium Inc , after a Dahlman Rose analyst downgraded the leading names. Analyst Charles Neivert cut ratings for Potash Corp of Saskatchewan, the world's biggest fertilizer producer, to "sell" from "hold," and dropped Mosaic Co to "hold" from "buy." Neivert cut Agrium, CF Industries Holdings Inc and Rentech Nitrogen Partners LP to "sell" from "buy." Neivert said the most favorable market conditions for nitrogen, phosphate and potash fertilizers have passed now that producers are moving ahead with expanding capacity. "Although (the first half) looks good, the industry may be just one crop away from a significant earnings downdraft driven by crop and capacity issues," he wrote in a note to clients. From 2012 through 2016, capacity is set to grow 18 percent for urea, a key nitrogen-based fertilizer, 12 percent for phosphate and 31 percent for potash, Neivert wrote. Potash Corp is focused on its namesake nutrient, while Agrium and CF mainly produce nitrogen. Mosaic is a leading producer of phosphate. Shares of Potash Corp slipped 1.3 percent and 0.7 percent in New York and Toronto, respectively, while Mosaic fell 1.9 percent and Rentech lost 4.1 percent in New York. Agrium fell the most, by 6.1 percent and 5.4 percent in New York and Toronto, even though it reported record-high fourth-quarter profit after normal trading hours on Thursday and beat analyst expectations for earnings per share. Analyst Robert Winslow of National Bank Financial noted that on an adjusted basis, however, Agrium's quarterly profit declined to $2.16 per share in 2012 from $2.34 a year earlier. Agrium is facing a proxy battle with its largest shareholder, Jana Partners, which wants Agrium to split its retail and wholesale divisions and make other changes to improve shareholder returns and operations. Equity markets were generally higher in early trading. (Reporting by Rod Nickel in Winnipeg, Manitoba; editing by Sofina Mirza-Reid)
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