Shares in industrial chemicals and fertilisers company Incitec Pivot Ltd (ASX: IPL) are inching higher and now trade at $3.28 apiece.
The Incitec Pivot share price is covering green territory despite there being no market-sensitive information from the company today.
However, the company released its full year results yesterday, where it grew net profit after tax (NPAT) over 91% year on year to $209 million.
This resulted in a substantial 70% jump in earnings per share (EPS) to 18.5 cents. Put another way, for every Incitec Pivot share in one's holding, the company generated almost 20 cents in value for investors in FY21.
This performance, among other factors, has the brokers covering the company very talkative and seeing green on the horizon for its shareholders
Let's take a closer look at what analysts at leading investment firms are saying about the Incitec Pivot share price.
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What's up with the Incitec Pivot share price lately?
The key takeout from Incitec Pivot's growth narrative – in the near term anyway – is the company's full year results.
Many experts believe the result was better than expected, especially when analysing the company's divisions separately.
For instance, the company's APAC Fertilisers division increased revenue and EBIT by 26% and 924% year on year respectively. The gains were underscored by a roaring backdrop in global commodities markets.
The company also commented on manufacturing performances in 2H FY21, which it feels will carry through to the current turnaround cycle in FY22.
Incitec Pivot CEO, Jeanne Johns also said that "premium technology continues to increase productivity and safety and reduce environmental footprint for our customers".
Johns also mentioned that the company's wireless electronic detonator, CyberDet ITM 2, was successfully trialled at a number of sites and that further trials are planned in 2022.
What are brokers saying?
In a recent note, the team at UBS reckon that Incitec Pivot has turned the corner in earnings from its latest results.
So much so that the broker upgraded its price target by 15% to $3.60 and retained its buy rating in response.
UBS said that "[Intec Pivot's] stronger earnings and cash flow outlook, combined with its low leverage position, means that it will be in a position to consider growth and capital management options at the end of FY22".
It also reckons that Incitec is well-positioned to capitalise on a recovery in fertiliser prices, and its manufacturing progress in FY21.
As such, the broker forecasts EBIT growth of 50% in FY22, should its thesis on agricultural commodities and Incitec's manufacturing play out.
Fellow broker JP Morgan holds a similar view, and reckons that investor sentiment is likely to improve, especially if "management can convince investors that its operational excellence initiatives will deliver the expected benefits".
It also notes the strengths to Incitec Pivot's earnings profile if strengths in ammonia prices persist into FY22, and subsequently retains its overweight rating on the share.
Aside from these firms, several other brokers upgraded their price targets on Incitec Pivot shares following its FY21 results.
Macquarie Group Ltd (ASX: MQG) bumped its target by 1.7% to $3.56, whereas Morgan Stanley raised its target by 21% to $4.30/share.
Meanwhile, both Morgans and Citi raised their Incitec valuations by 23% and 4.9% to $3.75 and $3.35 per share respectively.
Each of these brokers have a buy or outperform rating on Incitec Pivot shares as well.
The Incitec Pivot share price has delivered an outsized performance across the last 12 months. In that time, it has gained almost 55% after rallying around 44% this year to date.
