JPMorgan has moved The Mosaic Company to an Underweight rating from Neutral, signaling diminished near-term prospects for the fertilizer producer as raw material inflation and softer product pricing pressure profitability into 2026.
The firm expects Mosaic's EBITDA to decline to $1.96 billion in 2026, down from $2.4 billion in 2025. JPMorgan also anticipates negative earnings momentum in both the first and second quarters of 2026, with sequential and year-over-year deterioration in results during those periods.
Input cost pressures and product pricing
JPMorgan pointed to a mix of easing phosphate prices and sharply higher input costs as the primary drivers of the earnings downgrade. The bank said phosphate prices are easing due to affordability concerns among buyers. At the same time, key feedstock costs - specifically sulfur and ammonia - have moved higher.
Sulfur prices have roughly doubled, and JPMorgan estimated that Mosaic's sulfur bill will rise by about $525 million year over year in 2026, from $469 million to $994 million. This change corresponds to an estimated per-ton sulfur cost increase to $460 from $236.
The combination of elevated input costs and softer phosphate pricing has already had operational effects, with higher-cost phosphate operations in South America being idled as producers respond to squeezed margins.
Segment-level outlook
JPMorgan expects a marked decline at Mosaic's Fertilizantes unit, forecasting EBITDA to fall to $235 million in 2026 from $567 million. The bank highlighted that weaker segment performance will feed into the company's consolidated earnings and cash-generation profile.
Cash flow and funding concerns
Beyond earnings, JPMorgan flagged weak cash flow as a material constraint. Mosaic produced a free cash flow deficit of $534.6 million before dividends in 2025, and an $815 million deficit after dividends. In the current operating environment, the bank warned the company may struggle to fully fund roughly $1.3 billion in capital expenditures and about $280 million in dividends solely from operating cash flow.
Valuation and market context
Despite the downgrade, Mosaic shares have gained about 12% year to date, although that performance lags a roughly 20% rise in the broader materials sector. JPMorgan noted that some of the market optimism appears linked to manufacturing trends, while Mosaic's agricultural business may be less correlated with that sector strength.
JPMorgan set a price target of $24 for Mosaic, applying a 6x multiple to its 2026 EBITDA estimate. The bank said limited free cash flow beyond the dividend constrains upside potential, although Mosaic's holdings in Ma'aden provide some downside support to the valuation.
Bottom line
JPMorgan's downgrade centers on the dual challenge of rising feedstock costs and softer phosphate prices, which the bank believes will materially reduce Mosaic's EBITDA in 2026 and create cash-flow stress relative to capital and dividend commitments.