Freedom does U-turn on fertilizer producer Mosaic with upgrade amid Hormuz progress

Freedom Broker has upgraded mid-cap fertilizer producer Mosaic to "buy," after downgrading it to "sell" three months ago. The analysts expect the reopening of the Strait of Hormuz to normalize fertilizer raw-material prices and lead to a recovery in the company's margins.

Freedom has upgraded its recommendation on Mosaic, one of the world's largest producers of potash and phosphate fertilizers, from "sell" to "buy," according to a note seen by Oninvest.

The analysts also raised their target price by 33% to $32 per share, meaning almost 40% upside to the stock's Thursday closing price (U.S. markets were shut on Friday for a holiday).

Freedom improved its rating after the U.S. and Iran signed a memorandum of understanding that is supposed to provide for the reopening of the Strait of Hormuz. Its blockade starting in March 2026 has led to a sharp increase in sulfur prices. Sulfur is a key ingredient in phosphate fertilizers, and Mosaic's phosphate gross margin collapsed 55.5-fold to $2 per ton.

The analysts expect that metric to recover as sulfur markets normalize. According to the note, it is impossible to build a strategic sulfur stockpile or rapidly increase production because sulfur is a byproduct of oil refining.

The analysts note that despite the agreement between the U.S. and Iran, around 327 vessels remained in a waiting zone near the Strait of Hormuz as of mid-June, transit volumes were running at around 2% of prewar levels, and insurers had not resumed coverage. The industry estimates that it will take 3-4 months for shipping activity in the region to fully normalize, Freedom wrote.

As a result, the analysts expect Mosaic's EBITDA to recover to $2.28 billion in 2027 as sulfur costs normalize, the forecast forming the basis for the firm's upgrade and new target price.

For comparison, Mosaic's adjusted EBITDA fell 23.5% year over year to $416 million in the first quarter of this year. The company also reported a net loss of minus $258 million, versus net income of plus $238 million in the same period of 2025.

After Mosaic published those results on May 11, at least five analysts lowered their target prices on the stock. Overall, Wall Street maintains a cautious stance. Analysts have issued 13 "hold" ratings on the shares, nine "buy" calls, and one "sell" recommendation. The average target price stands at $26.60 per share, implying 16% upside from the latest closing price. The stock is down just under 5% year to date.

In early trading on Monday, Mosaic shares were down 0.13% as of this writing. Over the weekend, Iran again announced the closure of the Strait. Nevertheless, traffic through the waterway continues to increase, Bloomberg reports.