Agricultural sciences company FMC (FMC 6.83%) wasn't growing on the stock exchange Monday. The company's share price declined by nearly 5% that day, following an analyst's substantial reduction in his price target. The stock's decline was much steeper than the 0.9% fall of the bellwether S&P 500 index.
Yet another chop
Before market open Monday, Jeffrey Zekauskas of JPMorgan Chase unit J.P. Morgan lowered his FMC price target to $14 per share. That was quite some distance down from his previous fair value assessment of $43. Despite the big change, Zekauskas maintained his existing neutral recommendation on the stock.
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The analyst's reasons for the move weren't immediately apparent. The cut is part of a broader trend among professional FMC followers; reductions have also been made by researchers at institutions such as Wells Fargo, Morgan Stanley, and Mizuho in recent weeks.
This was entirely understandable, as they came in the wake of FMC's third-quarter earnings release. Although the company beat slightly on net income, it fell short significantly on sales -- these came in nearly 50% lower than the consensus analyst estimate. FMC also announced that its president, Ronaldo Pereira, was stepping down after 28 years with the company.
NYSE: FMC
Key Data Points
Cause for concern
Investors were right to worry about FMC's third-quarter top line, as it dropped by nearly 50% on a year-over-year basis. Additionally, management lowered guidance for both revenue and profitability for the entirety of 2025.
While it attributed the decline largely to developments in its business in India, such a slide is rather worrying, particularly if it comes as a shock and surprise. The impression is that FMC might not have a solid grip on its operations, and that alone is reason to avoid the stock for now.
