Nufarm Shares Upgraded as Two Leading Analysts Turn Bullish

Nufarm shares (ASX:NUF) have received a significant vote of confidence from two major analysts, with both RBC Capital Markets and Jefferies upgrading their stance on the agricultural chemicals company as signs emerge of a cyclical inflection in core markets and an improving path toward balance sheet repair.

Nufarm shares are fresh off a 13.67% market leading gain on Wednesday, and could be positioned to benefit from renewed institutional support following the dual upgrades, which arrive after a few years of valuation compression that saw broker price targets fall along with the share price.

The combination of two previously cautious research houses moving bullish on NUF represents a meaningful shift in sentiment for the stock, which has been weighed down by leverage concerns and subdued agricultural chemical demand over the past 18 months.

Analyst Upgrades

RBC Capital has upgraded its rating on Nufarm to Outperform, whilst raising its price target from A$3.40 to A$3.60, suggesting that the company’s cost reduction program and lower capex outlook could work favourably in the months ahead. The move signals that RBC believes the worst of the earnings deterioration has passed and that current valuation levels offer attractive risk-reward characteristics.

Jefferies has taken a decisive step, upgrading Nufarm shares from Hold to Buy with a price target of A$3.50, up substantially from its previous A$2.66 target. The upgrade marks a notable reversal for Jefferies, which had previously rated Nufarm at Underperform with targets as low as A$1.96, citing concerns about returns on funds employed falling below the company’s weighted average cost of capital and persistent cash flow underperformance.

The catalyst for both upgrades centres on what Jefferies describes as confirmation of a cyclical inflection in both Crop Protection and Seeds businesses. After an extended period of destocking and subdued farmer spending on agricultural inputs, signs are emerging that demand conditions are stabilising and beginning to improve. The Crop Protection market, which represents Nufarm’s core business, is expected to deliver double-digit growth into FY26 as farmer economics improve and inventory channels normalise.

Equally important to the bullish thesis is an improved cash flow outlook that provides what Jefferies terms a “viable pathway to deleveraging.” Nufarm has been operating with elevated net debt levels that have constrained strategic flexibility and raised questions about the sustainability of its capital structure. The company’s management has shifted toward more disciplined capital allocation, focusing on working capital efficiency and cash generation rather than aggressive growth investments.

This operational discipline is expected to drive meaningful progress on debt reduction, with leverage targeted to fall to approximately 2x net debt to EBITDA by FY26, down from more stressed levels that had concerned markets. The deleveraging trajectory is critical for equity investors, as it reduces the perceived risk of dilutive capital raisings and provides management with greater optionality for strategic decisions around the Seeds portfolio.

The Seeds Growth Platforms division, which includes the Omega-3 canola technology, has been a persistent drag on group profitability and a focal point for analyst scepticism. While Jefferies acknowledges that Seeds is expected to continue generating losses until Omega-3 achieves full regulatory deregulation after FY28, the trajectory is now seen as improving rather than deteriorating. Any signs of accelerating commercialisation or strategic alternatives for the Seeds business could provide additional upside to current forecasts.

The dual upgrades from RBC and Jefferies mark a clear turning point in sentiment for Nufarm shares in the analyst community, shifting the consensus view from one of caution and risk management to one of cyclical opportunity and improving fundamentals. There may well be hurdles still to overcome, yet this week is playing out very nicely for NUF bulls.