Nufarm's (ASX:NUF) fiscal first-half results confirmed a cyclical inflection in crop protection and seeds, alongside an improved cashflow outlook that offers a viable route to deleveraging, Jefferies said in a Wednesday note.

The company pointed to lean global channel stocks of crop protection products following a period of destocking, and the correction has largely played out with the market stabilized and growers shifting to just-in-time stocking, the investment firm said.

Active ingredient prices are recovering but remain low, which should support margins, as should Nufarm's portfolio reset, Jefferies said.

"Overall, we see the backdrop stable to better after a very tough period for the industry and growers," the equity research firm added.

Jefferies lifted its fiscal year 2027 to fiscal year 2028 earnings before interest, taxes, depreciation, and amortization forecasts on Nufarm by 5% to 6%, partly reflecting stronger performance in the crop protection and seeds segments.

It upgraded the company's rating to buy from hold, while raising its price target to AU$3.50 per share from AU$2.66.

Nufarm shares gained 2% in recent Thursday trade.