Mosaic (MOS) should benefit when phosphate margins eventually recover from unsustainably low levels caused by sulfur supply constraints, RBC Capital Markets said Monday in a report.

Margins may improve in 2027 if the Strait of Hormuz reopens and sulfur prices normalize, or if crop prices rise enough to support higher phosphate prices, RBC said. Any recovery will take time and may remain volatile over the next six to 12 months, the report said.

Last week, Mosaic lowered its capital expenditure guidance to $1.2 billion from $1.25 billion. RBC expects stronger free cash flow in H2 as the company reaffirmed guidance for a $300 million to $500 million working-capital reversal this year, implying a benefit of more than $600 million in H2.

RBC reiterated its outperform rating on Mosaic stock with its $27 price target.

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