Why CFRA Issued a Sell Rating on FMC Corporation ($FMC)

On January 16, 2025, CFRA downgraded FMC Corporation (NYSE: FMC) to Sell from Hold, before the 33.5% share price drop in the following month. Then, in early May, we issued a Strong Sell rating on FMC following clear signs of fundamental business deterioration and aggressive financial accounting practices. Our rigorous independent forensic analysis found operational, legal, and accounting pressures had intensified since early 2023, suggesting elevated investment risk.

• Leadership turmoil and executive turnover, coinciding with worsening fundamentals and ongoing securities litigation.
• Patent expirations on core products (Rynaxypyr, Cyazypyr) accelerated competitive erosion.
• Financial red flags, including elevated Days Sales Outstanding (253 days) and rising leverage (4.77x), indicated possible earnings manipulation.
• Channel stuffing and aggressive revenue recognition inflated performance prior to a 33.5% stock price collapse on February 5, 2025.
• Repeated covenant amendments and expanded supply chain financing revealed growing liquidity stress.
• Corteva (CTVA) continues to outperform due to stronger operational discipline, prudent leverage, and superior cash flow management.

FMC’s financial profile has materially weakened, with rising debt, deteriorating cash flow, and questionable accounting practices. The timing of management changes and the scope of legal challenges suggest structural—not cyclical—issues. We believe investors were underestimating the depth of FMC’s operational decline and the potential for further shareholder value destruction.

CFRA’s downgrade to Strong Sell (as of May 2, 2025) reflected our conviction that FMC’s headwinds were both systemic and persistent. Despite management’s optimistic guidance, the firm’s 2025 first-quarter results confirmed margin compression, pricing pressure, and liquidity constraints that will likely extend through year-end.

Two class-action lawsuits — Heeg v. FMC Corp. and Mohammed v. FMC Corp. — allege systematic financial misrepresentation from 2022 to 2025, including revenue inflation, concealed competitive threats, and misleading guidance. Testimonies from 19 former employees describe a culture of overstatement and internal dissent suppression.

FMC’s near 50% decline following the October 29 earnings release affirmed our view of financial distress, earnings quality risks, and heightened litigation exposure, with weak fundamentals and continued execution risk.

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