A Rough Summer Has Knocked Calyxt Down

So far, not so good for my late June high-risk/high-reward call on Calyxt (CLXT). The “high risk” part has certainly come through promptly, but shareholders have seen the shares sell off about 25% after a summer that certainly offered more bad news than good, highlighted by the surprising resignation of the CEO in late August only a couple of months after the equally-surprising resignation of the CFO, and a decision in Europe that puts the acceptance and development of gene-edited crops at risk.

Assessing these developments is not easy. Both executives may have had disagreements with the board of directors and/or Cellectis (CLLS), which still controls the company, and those disagreements may have included the unusual business model Calyxt is pursuing with its high-oleic soybeans and other consumer-oriented products. It is also possible that they saw fundamental issues with the technology and/or its path to commercial acceptance. Unfortunately there’s really no way to know at this point, and the one remedy I do have is to increase my discount rate to account for greater risk and uncertainty.

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A Rough Summer Has Knocked Calyxt Down

Monsanto Ending On A Position Of Strength

For a company that has been around for a while and leads its industry, there’s an odd cyclical quality to Monsanto (MON) where sell-side analysts seem to get ahead/behind of the company’s growth curve, leading to multi-quarter periods of out/under-performance relative to expectations. Monsanto looks to be late in the game with another outperformance cycle, but that likely matters much less now that the company should be approaching the end of the line as a publicly-traded company.

It remains to be seen if Bayer (OTCPK:BAYRY) will get all of the final approvals it needs to acquire Monsanto. No insurmountable obstacles have appeared yet, but there is still a risk that regulators could dig in their heels and/or demand concessions that Bayer finds unacceptance. Although there’s still about 5% upside between today’s price and the deal price, that’s not really out of line relative to the remaining risk (and time). Consequently, I’m more inclined to look for the exit with my Monsanto position and find new investment ideas.

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Monsanto Ending On A Position Of Strength

Monsanto Holding Serve Ahead Of Regulatory Debates

There's no question that the biggest value-driving events for Monsanto (NYSE:MON) are yet to come, as this leading agriculture technology company will have to go through what is sure to be a rigorous regulatory oversight process to get to the finish line with its would-be suitor Bayer (OTCPK:BAYRY) and deliver the $128/share in cash that a successful deal promises.

In the meantime, Monsanto is Monsanto. The ag market is still in recovery mode, and 2017 is not likely to be a banner year for acreage, but Monsanto is doing well with new launches in South America and continues to upgrade its product portfolio in North America. What's more, Monsanto has long been an R&D-driven story and management hasn't been shy about continuing to reinvest and expand that research pipeline. While the shares do trade above my estimate of standalone fair value, it seems as though today's price factors in only about a 20% chance of the deal going through, and that strikes me as a reasonable risk/reward.

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Monsanto Holding Serve Ahead Of Regulatory Debates

Monsanto Facing Some Hard Decisions

When I last wrote on Monsanto (NYSE:MON), I thought the company was still in for some rough quarters as corn prices continued to weaken, but that M&A chatter would continue to swirl. And that's exactly what has happened.

Monsanto's financials are wilting in the face of weak corn prices and more aggressive discounting from rivals, but Bayer (OTCPK:BAYRY) has come forth as a bidder for the company. Bayer hasn't come forward with an especially strong bid, though, and it remains to be seen whether Monsanto can coax a more appropriate bid from Bayer, get BASF (OTCQX:BASFY) involved, perhaps have another go at Syngenta (NYSE:SYT), or go it alone and deliver the benefits of its strategic partnership strategy.

On its own merits, I think Monsanto is at its fair value, as I do believe the soy business will start delivering in a big way and that the company has some high-potential pipeline projects reading to deliver in the coming years. While a bid from Bayer of $130 or higher would obviously represent upside, there is the risk that Bayer walks away or that the company pursues an alternative (like a venture with BASF) that may be worth more in the long term, but will require a great deal more patience.

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Monsanto Facing Some Hard Decisions

Seeking Alpha: Nektar Therapeutics Going Into The Decline With A Better Profile

I have no idea how long this downturn in the biotech sector will last, but Nektar Therapeutics (NASDAQ:NKTR) has survived its share in the 20-plus years of the company's existence. I also believe that the company is going into this downturn in the best shape it has been - Nektar can look forward to meaningful royalty streams from two drugs with $1 billion-plus potential, and the company has a more credible and focused pipeline.

My model suggests that the shares should be worth over $18 today, with royalties from approved drugs (AstraZeneca (NYSE:AZN)/Movantik and Baxter's (NYSE:BAX) Adynovate) making up about $9 of the valuation. Nektar's pipeline remains high-risk, but the potential of abuse-resistant painkillers and differentiated immuno-oncology drugs is meaningful, and the company seems to be making better decisions with regard to its R&D capital allocation.

It's certainly important to note that this is an ugly stretch in the biotech space and it could get worse (if not much worse) before getting better. My valuation is predicated in part on what the market has been willing to pay for approved drugs in the past, and the market can certainly undershoot those multiples during pullbacks.

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Nektar Therapeutics Going Into The Decline With A Better Profile

Seeking Alpha: Monsanto Making Do, But It's M&A That Everyone Seems To Want

Given the recent announcement of the intention of DuPont (NYSE:DD) and Dow (NYSE:DOW) to combine their operations and Syngenta's (NYSE:SYT) apparent increased willingness to at least consider M&A offers, the question of consolidation in the ag business seems to have rendered Monsanto's (NYSE:MON) near-term performance largely moot. Given the weakness in the ag sector, and ongoing softness in corn prices, that might not be such a bad thing.

I continue to believe that Monsanto is a solid long-term holding in the ag space. The stock is modestly undervalued and carries less operating risk than many cheaper-looking ag stocks. I also continue to believe that Monsanto will find a seat in this game of ag musical chairs, but there is definitely a risk that Monsanto either has to settle for something less than its first choice (or second...) or pay more than it would like to.

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Monsanto Making Do, But It's M&A That Everyone Seems To Want

Seeking Alpha: In A Bad Ag Market, Can Monsanto Do Enough That Matters?

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.

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In A Bad Ag Market, Can Monsanto Do Enough That Matters?

Seeking Alpha: Monsanto: Changing With The Times, Or Losing Focus?

Agribusiness giant Monsanto (NYSE:MON) is no stranger to controversy, and I can't imagine that the company's aggressive attempts to bring Syngenta (NYSE:SYT) to the bargaining table are going to ease concerns. In addition to worries about antitrust, divestitures, and synergies, there is at least an argument to be explored that Monsanto's shift away from a reliance on seeds and traits is part of a wider issue of the company losing focus on what made it such a winner in the ag space.

I don't really share the "losing focus" concern, but I do think Monsanto's interest in Syngenta, its Climate Corp business, and its ventures into biologics and RNAi may reflect a growing need for the major players in agriculture to touch multiple parts of the value chain to maximize their value-add.

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Monsanto: Changing With The Times, Or Losing Focus?

Seeking Alpha: FMC In The Right Businesses, But The Valuation Could Be Better

FMC (NYSE:FMC) has been making a lot of smart moves to better position the company for above-average long-term growth in multiple attractive specialty chemical markets. The Cheminova deal wasn't cheap, but added good diversification and offers expense-driven synergies, while the sale of the alkali business came at a better than expected price. Longer term, it's hard not to like crop protection, health/nutrition, and lithium.

I wasn't thrilled with FMC's valuation back in April of 2014, and the shares have fallen almost 30% since then, underperforming BASF (OTCQX:BASFY), Bayer (OTCPK:BAYRY), Dow (NYSE:DOW), and Monsanto (NYSE:MON) over that time. I'm still not enamored with the valuation today, but I do believe there is an opportunity for the company to outperform on both sales growth and margin leverage.

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FMC In The Right Businesses, But The Valuation Could Be Better

Seeking Alpha: Strong Soy And A Deep Pipeline Supports Monsanto

Investors have unquestionably grown more and more concerned about the ag sector over the past 12 months. Corn and soybean prices have rebounded from the end of September, but soy prices in particular are well below the year-ago levels. With less profitable insurance levels likely for 2015, planted acres may well come under pressure and some farmers may be tempted to skimp on seed traits as a way of saving money.

That's not a great backdrop for Monsanto (NYSE:MON), but I continue to believe that Monsanto will be hurt less than rivals like DuPont (NYSE:DD) and Syngenta (NYSE:SYT). Increasing competition is a risk, as the Chinese have approved traits from Syngenta, Bayer, and Dow's (NYSE:DOW) delayed launch of Enlist will most likely eventually become a full launch (albeit not until 2016).

What Monsanto continues to have in its favor is a meaningful yield advantage that supports its value proposition to farmers, not to mention a deep pipeline of traits targeting disease resistance, yield enhancement, and other productivity initiatives. Add in the potential of precision ag/analytics, biologicals, and RNAI-based products, and there is still a valid argument for Monsanto as a long-term holding even if the next year or two are more challenging.

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Strong Soy And A Deep Pipeline Supports Monsanto

Seeking Alpha: Nektar Therapeutics Has More To Give

This year has seen biotechs on a rockier road, but those companies that have continued to develop broad pipelines have fared a little better. Nektar Therapeutics (NASDAQ:NKTR) belongs on that list, as the company continues to move forward with an array of late-stage assets and a deep pipeline based upon its PEGylation technology (a technology that alters pre-existing drugs to improve efficacy, tolerability, and so on). Not only does Nektar still look undervalued, I believe that the assumptions underlining that valuation are still conservative enough that de-risking events (namely clinical trial results) can add meaningful value.

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Nektar Therapeutics Has More To Give

The Motley Fool: 3 Reasons to Like Zoetis

Wall Street is often willing to pay extra to sleep better at night, and Zoetis (NYSE: ZTS  ) is the sort of business that won't often lead investors to lose much sleep. The largest player in animal health, Zoetis is in the top three in every relevant sub-market it addresses and is often #1 or #2, but its leading product is less than 10% of sales and the top 10 list of products is less than 40% of revenue. Helping Zoetis' valuation even further is the relative lack of alternatives – companies like Neogen, Virbac, and Dechra are much, much smaller (and harder to own for larger funds), while the big comparables remain locked within large pharmaceutical companies like Merck (NYSE: MRK  ) , Sanofi (NYSE: SNY  ) , and Lilly (NYSE: LLY  ) .

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3 Reasons to Like Zoetis

The Motley Fool: Good News at Boston Scientific: What's Next

Flashy moves aren't always the best moves in med-tech. Medtronic (NYSE: MDT  ) shelled out big bucks for Aterial Vascular Engineering, CoreValve, and Ardian, and the first two led to significant patent infringement issues and the third may never lead to a marketable product (renal denervation). I don't want to pick on Medtronic alone, as Hologic, Johnson & Johnson, and Boston Scientific (NYSE: BSX  ) have all made some big deals that went south and squandered shareholder capital.

With that in mind, I like the recent updates from Boston Scientific. Between two clinical trial updates and a small acquisition, Boston Scientific is laying the groundwork for what should be some good incremental revenue and profit growth in the coming years. I don't believe these items are enough to vault the company's stock to the level of great buy, but they are positive developments nevertheless.

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Good News at Boston Scientific: What's Next

The Motley Fool: Why Merck's Bayer Deal Makes Sense

Pharma giant Merck (NYSE: MRK  ) has been a little more active than normal lately, with most of its activities pointing toward better value creation for its shareholders. In addition to strong phase 2 hepatitis C data that vaults the company back into serious competition, Merck was the first to file for approval for its PD-1 drug, putting it in the lead to be first-to-market with this next generation of oncology immunotherapies.

Merck also recently reported earnings, updated investors on its R&D and strategic priorities, and finalized the sale of its consumer health business to Bayer (NASDAQOTH: BAYRY  ) . All of this activated hasn't radically changed the company's earnings prospects, though it does free up significant capital that can be returned to shareholders or invested back into the business.

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Why Merck's Bayer Deal Makes Sense

The Motley Fool: Exelixis Inc's Comet Fails To Dazzle

Astronomers have grown very cautious over the years about predicting which comets will brighten the night skies, as all too many have failed to live up to expectation. Small biotech Exelixis'  (NASDAQ: EXEL  ) own comet, the COMET-1 study of cabozantinib in metastatic castration-resistant prostate cancer, likewise has failed to live up to the most optimistic hopes. Although the stock's 25% drop on Wednesday may seem like an overreaction, the reality is that the company badly needed a winner and the absence of an early halt due to efficacy suggests that the company could face a tough battle in getting market share in the prostate cancer space.

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Exelixis Inc's Comet Fails To Dazzle

The Motley Fool: Bayer Looks to Nuke Cancer

Cancer patients have seen a wide range of new therapies hit the market in the last few years. From Seattle Genetics antibody drug conjugate approach to immunotherapies from Bristol-Myers, to advanced hormone therapies from Johnson & Johnson (NYSE: JNJ  ) and Medivation (NASDAQ: MDVN  ) . Overall, investors, companies, and patients have seen some major advances in the oncology space. Now Bayer (NASDAQOTH: BAYRY  ) is stepping up to take full control over a potential new blockbuster in prostate cancer, and a new way of attacking cancer altogether.

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Bayer Looks to Nuke Cancer

Seeking Alpha: The Street's Ag Blues Seem To Be Weighing On American Vanguard

This has been a frustrating year for American Vanguard (AVD) and its shareholders. While the stock has done a fair bit better than fertilizer names, it has absolutely lagged other crop-related stocks like Monsanto (MON), DuPont (DD), and FMC (FMC). Bad weather hit the company hard around mid year, and even though results (and the stock) have recovered since, the damage was already done.

In my view, American Vanguard's prospects and appeal as a stock have a lot to do with your time frame. It looks as though the company is going to go into next year with more inventory than normal, but the Street is already well aware of this issue. There are also more rumblings about competition, but I have to wonder if this is a real change in philosophy on the part of major chemical companies or more of a passing fancy. American Vanguard does seem undervalued today, at least enough so as to deliver an expected long-term return in the double-digits, but with the markets turning skittish on the ag sector, this is likely only a good name for more patient investors.

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The Street's Ag Blues Seem To Be Weighing On American Vanguard

Seeking Alpha: Looking At AVEO With Fresh Eyes

It's been a horrible year for AVEO Pharmaceuticals (AVEO), and arguably a lot of the damage has been self-inflicted. Others have written at length about the FDA's decision to reject the company's application for tivozanib in renal cell carcinoma(RCC), as well as the deficiencies in the design of the pivotal trial, the company's apparent tone-deafness towards the FDA, and the lack of disclosure to shareholders regarding interactions with the agency.

I'm not here to rehash all of that. For better or worse, tivozanib is effectively dead in RCC for the time being. What I am interested in doing, though, is trying to approach the company with as close to a clean slate and fresh eyes as I can. After all, tivozanib is still in two other Phase II studies and AVEO could certainly follow in the tracks of other biotechs who faced crushing rejections only to come back later with approvable drugs or indications.

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Looking At AVEO With Fresh Eyes

Investopedia: Amgen Puts Onyx Pharmaceuticals In Play

Funny how an unsolicited bid will suddenly alert Wall Street to the value of a strong biotech.

While Onyx Pharmaceuticals (Nasdaq:ONXX) was generally a pretty well-regarded biotech, the news over the weekend that Amgen (Nasdaq:AMNG) had made a bid, and that management was now soliciting higher offers, has sent the shares rocketing up in pre-market trade. Given its solid collection of oncology/hematology assets, it won't be surprising if Onyx draws a crowd to its bargaining table before declaring a winner.

Good Reporting Triggers A New Era
Financial Post's Barry Critchley offered quite the scoop late Friday when he reported seeing a letter wherein Amgen made a formal bid for Onyx in the amount of $8.7 billion or $120/share. Onyx ultimately acknowledged the bid, but declared it insufficient and that the company was now going to begin an active sales process. To that end, it's worth noting that Onyx's press release acknowledging Amgen's bid made it clear that the company has received other indications of interest.

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http://www.investopedia.com/stock-analysis/070213/amgen-puts-onyx-pharmaceuticals-play-onxx-amgn-celg-bmy.aspx

Investopedia: Why Is Monsanto Evil, But DuPont Isn't?

As I explored almost a year ago in the case of Wal-Mart (NYSE:WMT) and Amazon (Nasdaq:AMZN), public perception is a curious thing. Two companies can do many of the same things, and yet one will take a much larger amount of flack and criticism for it. Or, as the Seattle Organic Restaurants website says, “the difference between a rainforest and a jungle is that a rainforest has a PR agent”.

To that end, I find it very interesting that Monsanto (NYSE:MON) is one of the most-hated companies on the planet, with the internet and social media full of stories and passed-around memes that declare it to be one of the worst companies in the world. And yet, DuPont (NYSE:DD) is just as big in genetically-modified seeds and agricultural chemicals, and pursues largely the same policies as Monsanto with respect to pricing, IP enforcement, and so on.

So it merits the question – Why is Monsanto evil, but DuPont isn't?

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http://www.investopedia.com/articles/investing/061913/why-monsanto-evil-dupont-isnt.asp