Deutsche Bank raises ICL target to NIS 42

Deutsche Bank this week raised its 12-month price target for Israel Chemicals (TASE: ICL)  and repeated a Buy rating for the fertilizer and potash provider's stock.

The company, which is controlled by Sami Ofer and Idan Ofer via The Israel Corporation (TASE: ILD), received a 12-month price target of NIS 42, which is 23% above its Wednesday starting share price on the Tel Aviv Stock Exchange.

The bank wrote that ICL stock had been underperforming its sector and could boast the dubious distinction of being the cheapest share in the sphere of fertilizers, other than one other lagger, Agrium.

"It trades at a 29% discount to peers and a 40% discount to PotashCorp," Deutsche Bank wrote, referring to the Potash Corporation of Saskatchewan.

The analysts say they expect the valuation gap between ICL and similar companies to close quickly as all companies in the potash space experience the same demand and pricing trends.

"We rate the stock a Buy since we expect fertilizer price rises to lead to high EBITDA growth in the next two years," Deutsche Bank wrote.

Another factor is that right now, potash prices in China are cheaper than in India and the analysts expect the companies to narrow or eliminate that gap.