CF Industries (CF) is positioned for strong cash generation in 2026 as it continues to benefit from high nitrogen prices driven by the supply disruption caused by the Iran war, RBC Capital Markets said in a note Friday.

Nitrogen prices are likely to remain inflated, even after the Strait of Hormuz reopens, and could start to normalize in 2027, the investment firm said. This is expected to drive the company's free cash flow generation to $2.5 billion this year, and potentially push share buybacks throughout 2026, RBC added.

The nitrogen market's current conditions also present an improved return profile for the company's Blue Point low-carbon ammonia joint venture in Louisiana, which is expected to enter construction phase this year, the firm said.

RBC has a sector perform rating on CF Industries, with a $125 price target.

Shares of CF Industries were up 6.8% in Monday trading.

Price: 122.82, Change: +7.80, Percent Change: +6.78