Dahlman Rose Reports Intrepid Potash Expensive On Relative Valuation

According to Dahlman Rose, Intrepid Potash's IPI tight markets lead to market upside. Dahlman Rose reported that it expects Intrepid to benefit from higher potash prices, and it maintains its Sell rating based on relative valuation. “We expect strong farmer economics and healthy spring application season to keep the potash market snug resulting in price hikes into the spring and summer. We have lowered our 2011 potash and Trio sales volume expectations to 805 Kmt (prior 830 Kmt) and 152 Kmt (prior 245 Kmt) as mine development and langbeinite recovery projects are in progress. We have increased our 2011 potash and Trio average realized price to $474/ ton and $251/ton (prior $431/ton and $201/ton) as Intrepid will sell more of its product to the agricultural markets. As a result, we have raised our FY11 EPS and EBITDA estimates to $1.33/share (prior $1.18/share) and $200 MM (prior $180 MM), but have maintained our Sell rating as IPI shares trade at a 2011 P/E and EV/EBITDA multiples of ~27x and ~13x, a significant premium to its peer group average of ~15x and ~10x, respectively.” Intrepid Potash closed yesterday at $35.54.