CF Industries enters June with an uncomfortable gap opening up between the Street's improving conviction and the market's actual behaviour — analysts keep raising targets, yet the stock has slid 7.5% over the past month while short interest quietly builds.
The short-interest trend is the week's clearest signal. Bears have added meaningfully, with SI % of FF climbing from roughly 4.9% at the start of May to 5.7% now — a 15% increase over the month and a further 5.7% build just this week. The raw count sits near 8.9 million shares short, close to the official FINRA settlement figure of 9.1 million as of mid-May. That pace of accumulation is worth watching, even if the absolute level is not yet extreme. On the other side, the borrow market remains wide open: availability is running at 1,438% of short interest — more than 14 shares available for every one currently lent out — and cost to borrow is a negligible 0.40%, down 14.5% on the week. There is no supply constraint driving this build. Bears are choosing to put on risk here, not being forced into expensive shorts on thin inventory.
Options traders are only modestly more cautious than usual. The put/call ratio has drifted up to 0.73, about 0.8 standard deviations above its 20-day average of 0.69. That is a mild tilt toward protection — nothing like the elevated defensiveness seen when the ratio touched 1.87 at its 52-week peak — and it sits well within the normal range for a stock that has pulled back. The ORTEX short score is edging higher, now at 39.8, its best level of the past two weeks, though still squarely in the mid-range. Overall positioning looks cautious rather than crowded.
The Street remains broadly constructive, and the most striking feature of recent analyst activity is the unanimity of the direction of travel. JP Morgan's Jeffrey Zekauskas raised his target today — June 3 — from $94 to $115, maintaining Neutral. That follows Barclays lifting to $145, Goldman Sachs to $132, Morgan Stanley to $135, and UBS to $140, all in April. The mean target now stands at $127.6, roughly 12.5% above Tuesday's close of $113.48. The dominant posture is Neutral or Sector Perform with higher targets — firms are acknowledging that the underlying business is stronger than previously priced, while stopping short of outright Buy calls. Valuation reflects a market that has re-rated the stock upward but is now digesting the move: PE has compressed from around 10.1 to 7.8 over the past 30 days, and EV/EBITDA has pulled back by roughly half a turn to 5.8x.
The fundamental debate is focused squarely on nitrogen pricing from here. Bulls point to the 7x nitrogen valuation multiple adjustment, strong cash generation supporting buybacks through the cycle, and the company's strategic positioning in low-carbon ammonia via the Blue Point project. Bears counter that Chinese urea export volumes and a seasonal second-half demand slowdown could erode pricing power, while new US Gulf ammonia supply and any further compression in European natural gas costs may squeeze global nitrogen margins. EPS momentum factor scores rank in the 91st (30-day) and 94th (90-day) percentiles — the estimate revision cycle has been strongly positive — but forward EPS growth is expected to shrink sharply year-on-year, which keeps the Neutral camp anchored. The EV/EBIT factor ranks at the 85th percentile, so the valuation story is not obviously cheap.
The earnings reaction data adds a layer of caution. The most recent print on May 6-7 produced a 7.3% single-day drop and a further 1.9% drag over the following week. The previous release in late April generated a 2.5% gain and extended to +3.6% over five days. CF's next scheduled report is August 5. With short interest rebuilding into a price decline, the key variable to watch between now and then is whether nitrogen spot prices stabilise — or whether the seasonal softness the bear case anticipates begins to show up in forward curves before the company has a chance to report.
Peer context confirms CF is not alone in the sell-off but is feeling it more acutely. IPI fell 4.3% on the week, UAN dropped 3.4%, and closest correlate NTR lost 1.9%. LYB and DOW held up better, off 2.5% and 1.6% respectively, suggesting the pressure is more nitrogen-specific than a broad chemicals move.
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