Loop Capital downgrades FMC on lack of inventory visibility

Loop Capital downgraded FMC Corporation to Hold from Buy with a price target of $55, down from $68. The analyst does not believe FMC’s franchise “is broken, per se,” and sees good potential for a “normalization” trade once the protracted destocking activity across the global crop protection chemicals industry more fully runs its course. However, if FMC cannot reliably calibrate or identify the magnitude of its own product channel inventories in key overseas regions, it is increasingly difficult to have confidence in estimates, particularly in the out years, the analyst tells investors in a research note. Loop says FMC acknowledged that substantial excess inventories for key insecticide products, including its flagship Diamides, continue to persist in the very important agriculture market in India. It thinks inventory headwinds are likely to undermine investor confidence, as well as weigh on sentiment and FMC’s valuation.