Nufarm's turnaround arc: Leverage down, earnings up and brokers upgrading

It's been a year since Nufarm shareholders watched 30% of their capital vaporise in a single session. The recovery has been slow and uneven, but Wednesday's 13.6% rally dragged the stock back to breakeven, off the back of a first-half result that analysts are calling a genuine earnings inflection point.

The move took the stock to its highest level since 21 May 2025, the day the previous interim print blew up and management was forced to pull its Omega-3 revenue targets, take a $28 million inventory writedown, and watch leverage spike to 4.5x.

Nufarm price chart (Source: TradingView)

1H26 at a glance

Nufarm's first-half result was largely in line with guidance, with improved margins, lower capex and a material reduction in net leverage.

Here are the key numbers:

• Revenue down 5% year-on-year to $1.7bn

• Underlying gross profit margin up 3.7 ppt to 33.0%

• Underlying EBITDA up 18% to $243m, at the top of the $239-244m guidance range

• Underlying NPAT up 35% to $52m

• Net debt down $135m to $1.23bn

• Leverage down 20% to 3.6x, with an FY26 year-end target of 2.0x

Other notable takeaways include:

• FY26 guidance of "strong growth in underlying EBITDA" was reaffirmed

• A $50m cost-out program is on track, with a further $50m run-rate targeted by the end of FY27 (full benefit landing in FY28)

• Continued growth in the Crop Protection division, improving on the 1H26 growth rate, driven by "continuing margin improvement and delivery of cost savings"

• Seed Technologies FY26 EBITDA guidance upgraded to $40m from prior $30m

The Seed Technologies upgrade matters because this segment houses the troubled Omega-3 canola program, which was the line item that detonated the stock a year ago.

The Omega-3 platform's losses have narrowed sharply, helped by the relocation of production to South America and a sharp increase in fish oil prices. Management is also targeting Omega-3 deregulation in Europe and China for 2028.

Analyst takeaways

The 1H26 result has triggered a wave of upgrades and target hikes, with the broker community now broadly aligned that Nufarm has entered an earnings inflection point. Two of the three brokers have moved their ratings higher.

• UBS upgraded to Buy from Neutral, raised target from $2.80 to $3.50, citing sustainable crop protection margins, a beat in emerging platforms led by Omega-3 and hybrid seeds, and stronger FY27-28 earnings growth potential as cost programs outpace inflation.

• RBC Capital Markets upgraded to Outperform from Sector Perform, raised target from $3.40 to $3.60, highlighting the capital efficiency pivot toward returns over volume, credible progress on dual cost programs, leverage tracking toward ~2x by year end, and improving ROIC from a higher-margin mix.

• Bell Potter retained Buy, target unchanged at $3.60, noting strong seeds revenue growth from hybrids and emerging platforms, solid cost program execution, positive FCF supporting the balance sheet, and a persistent valuation discount despite strategic progress.

Where to from here?

Nufarm is in the midst of a meaningful turnaround. The stock trades at a substantial discount to global peers, with an EV/EBITDA of 5.7x vs. global peers at 9.2x, according to an April note from Macquarie. Analysts see this as an opportunity, though the discount has been there for a reason, and the company needs to keep delivering to close it.