Noah Zivitz

Managing Editor, BNN Bloomberg

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The second abrupt departure of a chief executive at Nutrien Ltd. in less than a year raised some alarm bells on Bay Street Tuesday, but at least one analyst is telling clients this is an opportunity to load up on shares in the crop nutrient giant.

RBC's Andrew Wong said in a report published late Tuesday afternoon that the investment community "will likely never really know the full story" about the circumstances that led to Mayo Schmidt's sudden exit. However, at the end of the day, he said there's an attractive opportunity for investors who can stomach the management turnover.

"While the second sudden CEO change in a short period of time raises questions regarding management and board stability, we believe Nutrien has a solid foundation built upon a combination of well-run assets and strong financials," he wrote.

"We view the recent pull-back in shares as a good entry-point for investors that can look past some near-term uncertainty and noise from the recent management changes."

Nutrien announced Schmidt's departure Tuesday morning, and Chair Russ Girling said the board was launching a global search for the company’s next "long-term leader." Until that individual is identified, Nutrien appointed Ken Seitz, who was leading the company's potash operations, as its interim chief executive.

Schmidt lasted less than a year in the top job after he inherited the position last April when Chuck Magro stepped down. Prior to that, Schmidt was serving as Nutrien's chair and was a familiar name in Canada's corporate landscape after stints as chief executive of Hydro One Ltd. and Viterra Inc. Nutrien’s New York-listed shares ran up almost 36 per cent during Schmidt’s time as chief executive.  

"While a lot of focus [Tuesday] was on the CEO changes and concern on longer-term strategy, we think it is more constructive to focus on what we do know — Nutrien has a diverse and well-run asset base across the ag and fertilizer sector which is seeing some of the best market conditions in over 10-years," Wong said in his report to clients.

He has an outperform rating on Nutrien, and a price target of US$85.00 on its New York-listed shares. Of the analysts tracked by Bloomberg, 18 have a buy (or equivalent) rating on Nutrien, four say it's a hold, and just one analyst has a sell recommendation. The consensus 12-month price target is US$81.13, implying 13 per cent potential upside from Tuesday's closing price.