Nufarm Ltd (ASX: NUF) shares have had a tough 12 months, with the agricultural chemicals company's share price falling sharply from its highs.
However, with the ASX 200 stock trading at $2.26 today, Bell Potter believes the outlook may be improving for investors.
Here's what the broker is saying following Nufarm's recent annual general meeting (AGM) update.
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What is the broker saying?
Bell Potter highlights that comments made at Nufarm's AGM point to a strong start to the new year, with management reaffirming guidance and highlighting improving conditions across key markets. The broker said:
NUF'S AGM comments were positive pointing to a strong year. We note two key AGM comments as well as recent movements in indicators:
Reaffirmation of guidance: NUF has made a positive start to the year. Reaffirming all elements of the guidance statement at the time of the FY25 result, which were: (1) Expect strong FY26e underlying EBITDA growth under normal conditions; (2) Crop protection EBITDA continuing to grow, moderating on the +18% YOY growth in FY25; (2) Seed technologies growth in EBITDA from hybrid Seed and targeting a $30m YOY improvement in the emerging platforms; and (4) Expect positive free cashflow in FY26e and net debt/EBITDA of ~2.0x (vs. 2.7x in FY25).
Bell Potter also believes FY26 is shaping up as a year of solid earnings growth, supported by a sharper focus on cash generation and balance sheet repair. It adds:
FY26 a strong year of growth: FY26 promises to be a year of strong growth in profitability. With NUF focused on free cash flow generation and delivering a significant reduction in leverage by year end.
Early indicators look supportive
The broker also highlighted early activity indicators that suggest demand conditions are improving, particularly in the higher-margin northern hemisphere crop protection markets. Bell Potter said:
Early activity indicators: In general, initial acreage reports in the northern hemisphere have been supportive of demand for crop protection products and this is indicative of increased import activity into these markets, where YTD volumes are demonstrating double digit YoY gains. Australian soil moisture profiles are below average as is the three-month outlook. Omega-3 pricing indicators remain at levels broadly consistent with those seen at the FY25 result and demonstrating double digit YoY gains.
Is it time to buy this ASX 200 stock?
According to the note, the broker has retained its buy rating on Nufarm's shares with a price target of $3.60. Based on its current share price of $2.26, this implies potential upside of 59% for investors over the next 12 months.
Commenting on its buy recommendation, Bell Potter said:
Our Buy rating is unchanged. NUF continues to trade at a material discount to global peers (crop inputs ~9.3x FY26e EBITDA and seeds at ~10.0x FY26e EBITDA), despite favourable indicators for omega-3 returns in FY26e and demand indicators in the higher margin northern hemisphere crop protection markets looking generally supportive.
