Freedom Broker analysts initiated coverage of Nutrien (NTR), CVR Partners (UAN) and LSB Industries (LXU) with a “Hold” rating. Their 12-month target prices are $78, $124 and $9.50, respectively. With current quotes at $69.37, $123.76 and $10.37, this implies upside of 12.44% for Nutrien and 0.19% for CVR Partners, while for LSB Industries it implies a decline of 8.39%. In the experts’ view, North American producers’ cost advantage is already reflected in valuations, while the normalization of fertilizer prices is limiting further profit growth.
Three companies—different dependence on nitrogen fertilizers
Nutrien is a diversified fertilizer producer with nitrogen and potash segments, as well as a Retail business serving agricultural producers. This structure reduces results’ dependence on a single product, but at the same time limits the impact of high nitrogen fertilizer prices on overall profit.
CVR Partners operates two plants and produces nitrogen fertilizers. The company is structured as a partnership and distributes available cash to unit holders. As a result, payouts are especially sensitive to product prices, plant operating costs and turnaround schedules.
LSB Industries operates three nitrogen plants in Arkansas, Alabama and Oklahoma. The company supplies agricultural and industrial customers and, among the producers covered, has the greatest dependence on ammonia.
Main thesis: the cost advantage will persist, but narrow
Freedom prefers nitrogen fertilizers over potash and phosphates for investment. Analysts believe a producer’s position on the cost curve determines profitability throughout the cycle, and North American facilities benefit from relatively cheap feedstock.
However, experts view the current situation as a temporary price shock rather than a sustained supply shortage. In their estimate, lower realized prices in 2027–2028 will partially offset the cost advantage and limit the scope for companies’ valuation expansion.
Target prices are based on enterprise value to forecast 2027 EBITDA—the earnings before interest, taxes, depreciation and amortization metric. For Nutrien, analysts apply a 7.9x multiple, reflecting scale, balance sheet strength, dividends and Retail. CVR Partners is valued at 5.6x, and LSB Industries at 5.9x.
The Strait of Hormuz strengthened the advantage of U.S. gas
According to the analysts’ review, since February 28 traffic through the Strait of Hormuz has remained significantly constrained. In 2024, this route accounted for 34% of global urea trade and 20% of liquefied natural gas trade. Disruptions to Qatari LNG supplies widened the gap between European and U.S. gas prices. Freedom Broker estimates that, on an ammonia-production equivalent basis, the advantage is about $850 per ton.
Analysts’ base case assumes the strait reopens around year-end, followed by a reduction in the feedstock-cost advantage to about $300 per ton of ammonia. At the same time, damage to LNG infrastructure in Qatar could slow the recovery of supplies and the normalization of European gas prices. If restrictions persist until spring 2027, North American producers could receive additional support from another rise in fertilizer prices.
Nutrien: diversification limits profit growth
In Q2 2026, Nutrien’s consolidated adjusted EBITDA totaled $2,430 million versus $2,486 million a year earlier, down 2%. In the nitrogen segment, the average realized price rose 17% to $452 per ton, but sales volumes fell 25% to 2.25 million tons. As a result, adjusted segment EBITDA declined 5%, from $665 million to $635 million.
The potash segment increased adjusted EBITDA by 4% to $658 million. In Retail, the metric fell 2% to $1,131 million. Freedom forecasts Nutrien’s average annual EBITDA growth in 2025–2028 at 1.7%. Experts note that the nitrogen business’s benefit from cheap gas is partly diluted by results in other segments.
CVR Partners: the most direct exposure to prices and cash distributions
Analysts view CVR Partners as the most direct bet on the profitability of nitrogen fertilizer production. An additional feature is the use of petroleum coke at the Coffeyville plant, which partly reduces cost dependence on U.S. gas prices. In Q2, company revenue rose 20% year over year to $202 million, and EBITDA rose 59% to $107 million. The distribution per unit increased 56%, from $3.89 to $6.08.
Freedom forecasts distributions of $18.31 per unit for 2026 and $22.20 for 2027. However, they depend on available cash after setting aside funds for capex, maintenance turnarounds and debt service. As a result, the distribution amount can vary significantly from quarter to quarter.
LSB Industries: price normalization limits the outlook
LSB Industries’ revenue in Q2 increased 11% to $168.1 million, and adjusted EBITDA rose 39% to $53.1 million. Analysts forecast adjusted EBITDA of $190 million in 2026, $156 million in 2027 and $113 million in 2028. At the same time, the decline in 2027 is almost entirely due to lower turnaround expenses, which are added back when calculating the adjusted metric. Pressure from the normalization of ammonia and other nitrogen product prices will be more evident in 2028.
Part of LSB’s sales is carried out under contracts that take the producer’s costs into account; however, such agreements do not provide full protection against downtime, higher other expenses, and margin compression upon contract renewals.
El Niño is reshaping the geography of demand
The second important factor in the review is the strengthening of El Niño, a climate phenomenon that can alter precipitation patterns and affect harvests. According to the NOAA update cited by analysts dated October 8, the probability of a historically strong event in October–December is estimated at 83%. The Indian monsoon ended with rainfall 12.6% below normal.
Freedom expects that poorer harvests in parts of Asia will reduce fertilizer use in the region but increase the need for grain imports. This puts pressure on global urea prices while simultaneously supporting fertilizer demand from North American farmers. At the same time, analysts do not see a strong El Niño as a standalone guarantee of higher U.S. grain prices.
What investors should watch
Key risks include an earlier reopening of the Strait of Hormuz, falling fertilizer prices, and higher U.S. gas prices as new LNG export capacity comes online. For CVR Partners and LSB Industries, production concentration is also significant: a shutdown of a single facility can noticeably affect quarterly results.
Near-term milestones include LSB Industries’ report on October 28 after the market close, Nutrien’s results on November 4, and CVR Partners’ reporting in early November. Analysts will be watching realized prices, plant operations after turnarounds, and companies’ ability to return cash to investors.
This is not an individual investment recommendation.