CF Industries Carbon Capture Credits EBITDA Potential Could Be As High As $50 Million: Analyst

Oppenheimer analyst Kristen Owen initiated coverage on CF Industries Holdings, Inc. CF, with a price forecast of $114.

The analyst suggests that while fertilizer affordability may be challenging in 2025, the ammonia market presents a promising long-term growth opportunity beyond agriculture.

Industry trends are favorable, with rising production costs limiting new capacity and global demand continuing to grow, which should tighten the supply-demand balance and support prices.

According to Owen, CF, compared to other fertilizer companies, has historically outperformed in terms of total shareholder return, indicating strong capital allocation and consistent shareholder value creation.

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The analyst notes that CF’s scale, operational efficiency, and access to low-cost energy have positioned it as one of the world’s lowest-cost ammonia producers, a benefit amplified by recent geopolitical disruptions. With North America driving the next phase of LNG capacity expansion, the cost advantage for North American ammonia production is expected to persist over the forecast period.

The analyst highlights that the nitrogen supply/demand balance is expected to stay favorable in the near term, with China exports being a key variable.

While ammonia is seen as essential for industrial decarbonization, the analyst acknowledges carbon capture presents the lowest risk and fastest return on investment.

The model includes an estimated ~$50 million quarterly EBITDA from 45Q credits starting in the fourth quarter of 2025, Owen writes.

Overall, CF presents a unique opportunity due to its focus on the ammonia market, which offers promising long-term growth beyond traditional fertilizer uses.

Owen also emphasizes that CF has shown superior capital allocation compared to its peers, consistently delivering strong shareholder value throughout the cycle.

The analyst estimates the company to report revenues of $5.9 billion in FY24.

Price Action: CF shares are trading higher by 0.62% to $90.38 at last check Thursday.

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