Bank of America has downgraded shares of Mosaic Co (NYSE:MOS) to ‘Neutral’ from ‘Buy,’ citing a more challenging backdrop for margin expansion in the phosphate fertilizer market.
The firm also lowered its price target by $3 to $30. Shares traded more than 6% lower at about $25 on Friday.
Bank of America noted that while phosphate market fundamentals remain supportive, rising costs for raw materials, particularly sulfur and ammonia, are likely to weigh on profitability in the near term.
The bank highlighted that one unit of DAP fertilizer requires 0.4 units of sulfur and 0.2 units of ammonia, both of which have risen roughly $100 per metric ton, creating a margin headwind of about $60 per metric ton in the fourth quarter of 2025.
Mosaic benefits from some in-house ammonia production and US Gulf Coast sulfur sourcing, partially insulating it from global supply disruptions.
However, the bank’s analysts pointed out that US phosphate prices have not increased in line with international levels, raising concerns that affordability could limit demand in key markets such as Africa and Southeast Asia.
“Margin expansion is now more likely a 2027 story,” Bank of America wrote, referencing the ongoing geopolitical tensions in Iran, which have contributed to raw material inflation and elevated capital expenditures.
As a result, the bank lowered its 2026 EBITDA estimate by $129 million to $1.834 billion and reduced the price target to $30, noting that limited cash flow makes a case for multiple expansion less compelling.