Monsanto (NYSE:MON)
wasn't the first to feel the pinch from the negative ag cycle, and it
certainly hasn't suffered the most, but weak grain prices have
nevertheless done their damage. Monsanto's shares are down about 10%
from my last update,
and about 20% over the last year, as investor expectations and analyst
targets have dropped significantly in the face of weak crop pricing and
pinched farmer budgets.
There's always a big "but" that goes with
forecasting the results for any ag-sensitive company and that is the
unpredictability of the underlying market; a really bad (or good) crop
could shift prices dramatically and change MON's operating environment
quickly. That said, a lot of those fluctuations even out over time, and I
believe the company's deep, high-quality R&D operation is a strong
source of future value.
My expectations for Monsanto were lower
than the Street's prior to this most recent reckoning, so my revisions
are correspondingly more mild. I still expect MON to be a 10%-plus
long-term grower, supporting a $105 fair value today and maybe some
upside if a deal for Syngenta (NYSE:SYT) or another strategic target materializes.
Continue reading here:
In A Bad Ag Market, Can Monsanto Do Enough That Matters?
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