Nufarm Ltd (ASX: NUF) shares were turning heads yesterday after tumbling 6% in a single session.
This halted strong momentum from the Australian agricultural chemical and seed technology company.
Its share price remains up 29% year to date.
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What were investors reacting to?
Nufarm shares fell following the release of an ASX announcement from the company.
As reported by Aaron Teboneras, Nufarm announced an updated FY26 guidance.
According to the release, underlying EBITDA is expected to increase approximately 25% on the prior corresponding period.
For FY26, underlying EBITDA is expected to be between $370 million and $380 million, representing 25% growth at the midpoint compared to FY25.
Despite these positive numbers, investors were exiting their positions in Nufarm shares.
It's possible this is because Nufarm is facing another $90 million to $110 million of restructuring costs, adding to last year's large statutory loss and raising concerns about ongoing costs and uncertainty.
Although underlying EBITDA is improving, investors want to see whether the restructuring actually leads to sustainable profits and cash flow, rather than repeated one-off charges.
What is Bell Potter's outlook for Nufarm shares?
Following the fall to $3 a share for Nufarm shares, Bell Potter released updated guidance.
Ultimately, the broker's view is positive.
Bell Potter said Nufarm's underlying performance is stronger than expected, particularly in Seeds, while the balance sheet is improving and the restructuring is progressing.
Bell Potter expects underlying EBITDA to remain strong and grow from FY26 onward, but NPAT will remain weighed down by largely non-cash restructuring costs, meaning statutory profit may lag the underlying EBITDA improvement.
Buy rating unchanged
Bell Potter ultimately sees plenty of upside despite the announcement. The broker retained its buy recommendation and raised its price target to $3.90 for Nufarm shares (previously $3.75).
Our Buy rating is unchanged. In FY26e NUF has delivered a result that was consistent with our expectations, while incurring costs related to plant outages that were not expected. The underlying performance looks to be stronger than what is implied at the headline, with material YoY growth in Seeds and the basis of the next leg of cost outs now articulated.
From yesterday's closing price, this indicates an upside potential of 30%.
Importantly for investors, Bell Potter isn't the only broker with a positive view.
The team at Morgans recently placed a $4.15 price target on Nufarm shares.
From current levels, this indicates an upside potential of 38%.
