UBS downgrades FMC Corp, slashes price target on execution risks

Investing.com -- UBS downgraded FMC Corporation (NYSE:FMC) to "Neutral" from "Buy" given increased execution risks tied to the company's strategic pivot and ongoing pressure from declining crop chemical demand. The brokerage also slashed its price target by 42% to $38 from $66.

UBS analysts noted that FMC’s revised 2025 outlook marks a third consecutive year of EBITDA below $1 billion, with risks mounting from pricing pressure and a shift toward a direct-to-farm sales model in key markets like Brazil. The transition, expected to take place over the next one to two quarters, adds complexity and potential delivery risks.

The abrupt change to lower manufacturing costs and pricing for channel partners was a bit of a surprise, UBS said, warning that ongoing debates over diamide patent expirations could weigh on the stock for years.

The firm also lowered its 2025 EBITDA forecast by 14% to $877 million, 7% below consensus estimates, and flagged concerns over weaker free cash flow (FCF). With projected FCF of around $290 million in 2025, FMC may face extended deleveraging, limiting cash for growth initiatives.

UBS cut its valuation multiple on the stock, citing a "delayed earnings recovery trajectory" and heightened exposure to commodity-driven pricing risks.