ELD fell -6.1% yesterday following a “Sell recommendation” from Citi, not an ideal day to deliver such a report. They initially described ELD as a “high-quality agricultural play” but they believe that the risks of drier conditions ahead could weigh heavily on ELD i.e. a deterioration in crop production is likely to flow through to less demand for crop protection and fertiliser products which could cause ELD’s customers to sell livestock earlier than usual in the cycle pressuring prices in the process.
- We believe the risk/reward favours ELD around $7 and if we do indeed see more favourable weather conditions the stock could be back in double figures.
However, this is not just a weather play, markets are expecting commodity prices to continue to struggle but there cyclical and often surprise the masses. ELD is a market leader and after more than halving from its 2022 high, we believe the risk/reward continues to favour the buyers.
MM is long and bullish toward ELD
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