Shares of Nutrien Ltd. extended their rally Monday after an analyst upgraded the company's stock amid the short-term risks from Russia’s invasion of Ukraine and longer-term fertilizer market opportunities. 

Piper Sandler & Co. Senior Research Analyst Charles Neivert increased his price target on Nutrien’s U.S.-listed shares to US$112, implying an 18 per cent upside to its current price. He raised his recommendation on Nutrien's shares to overweight (the equivalent of a buy) from neutral (the equivalent to a hold).

He also increased price targets on fellow fertilizer names Mosaic Co. and CF Industries Holdings Inc. to US$80 per share and US$120 per share, respectively. 

“The updated outlook for the shares is based on a combination of highly constructive long-term secular trends for the grains and shorter-term disruptions caused by sanctions, production curtailments, energy allocation issues and the Russia/Ukraine conflict, which affect both nutrient and grain markets,” Neivert said in a note to clients Monday.

Russia and Ukraine are major suppliers of agricultural commodities to the global market.

While he said the conflict between the two countries could have a “deeper, more persistent impact than current markets are implying,” he emphasized that his upgrade was more tied to the long-term outlook for the grain market, which supports higher fertilizer prices. 

He noted grain farmers have been operating at record or near-record capacity for several years and have not meaningfully increase inventories, which could lead to an “extended period of constructive grain pricing.”

“[Agriculture] shares may be in the strongest position they have been in since 2007,” he said. 

Nutrien’s Canadian- and U.S-listed shares have rallied roughly 40 per cent since late January.

Neivert noted significantly lower European natural gas prices, potential changes in China and Russia’s fertilizer export policies and large production increases in any or all of the fertilizer products may pose risks to his analysis. 

As Nutrien reaps the benefits of higher commodity prices, the Saskatoon-based company is still looking to fill the top job at the firm after former Chief Executive Officer Mayo Schmidt abruptly departed in January after being in the role for less than a year.  

Neivert said he doesn’t think these management issues will impede Nutrien’s ability to grow its market share over the long-term. 

Bloomberg News reported the company said Schmidt’s exit was “necessary and in the best long-term interest of the company and its shareholders” in a regulatory filing.