Jefferies announced on Tuesday that it has moved Yara International ASA to a "hold" rating from "buy" and reduced its price target to 470 Norwegian crowns, down from 610 crowns. The broker attributed the change to a combination of a weaker agricultural backdrop, lower fertilizer price assumptions and an upward revision to its gas price outlook.
The revised target of 470 crowns represents the midpoint of Jefferies' two valuation approaches: a discounted cash flow valuation of 480 crowns per share and a sum-of-the-parts valuation of 460 crowns per share. That blended target suggests an implied EV/EBITDA multiple of 5.1 times, which Jefferies noted is at a discount to peers. Based on Yara's last close of 447.70 crowns, the new target implies roughly 5% upside.
Jefferies said the downgrade was "driven by a weaker ag backdrop, lower fertiliser prices, revised down farmer incomes, weaker sentiment and higher gas assumptions." As part of its updated modelling, the broker lowered its fertilizer price deck "across the curve," leaving its estimates on average 7% below consensus for the 2026-2028 period.
On the earnings front, Jefferies forecast second-quarter EBITDA of $1.074 billion, which it expects to be up 65% year-over-year but approximately 2% below Visible Alpha consensus. The broker trimmed its EBITDA forecasts for the medium term, cutting 2026 estimates by 3.4% and reducing 2027 and 2028 forecasts by 15.4% and 15.9%, respectively. Sales estimates were also lowered by 0.8% for 2026, 5.3% for 2027 and 6% for 2028.
Jefferies now expects farmer incomes to be negative in both 2026 and 2027. The broker pointed to "higher input costs (fertiliser, diesel) and softer realised crop pricing compressing margins versus prior assumptions for recovery," a dynamic that it said has weighed on sector sentiment.
Supporting that view, Jefferies highlighted deteriorating sentiment readings in both major markets. It noted that the U.S. Ag Economy Barometer fell to 119 in May from 121, while Europe's CEMA business climate index declined to -20 from -9. Jefferies said these moves have pushed "the sector back into recession territory."
Energy assumptions were also revised higher. Jefferies increased its European gas price assumptions by about 12% over a three-year horizon versus prior estimates, citing recent supply disruption and a delayed normalization due to what it described as "damaged LNG infrastructure."
Despite the more cautious near-term outlook, Jefferies still described Yara as a high-quality nitrogen platform. The broker stated that "Yara continues to screen as one of the highest-quality nitrogen platforms globally, supported by its global production footprint, downstream nitrates integration, and optionality in clean/blue ammonia," adding that the company's "improvement agenda and capital discipline remain credible."
Nevertheless, Jefferies flagged a "greater likelihood of slippage" to management's timing for a final investment decision on a blue ammonia project, which management continues to guide for the first half of 2026. The broker said capex inflation and policy uncertainty could be drivers of delay, and it described such caution as "evidence of discipline in maintaining return thresholds in a volatile macro environment."
On balance sheet metrics, Jefferies said net debt to EBITDA is expected to remain "~1x through the cycle," and it continues "to see attractive through-cycle cash returns."
The broker listed several catalysts that could influence the shares: second-quarter results, the mid-2026 investment decision, nitrogen price moves and farmer economics.
Context and implications
The downgrade and the set of forecast cuts reflect Jefferies' more conservative assumptions on commodity pricing and on end-user farm profitability. For investors, the updated target and earnings revisions present a lower valuation backdrop, while the potential delay to the blue ammonia investment decision highlights project execution and capital allocation risk. For agricultural markets, the combination of higher input costs and softer crop pricing points to compression in farm margins over the near term.