From Notable Calls:
- Morgan Stanley is positive on Monsanto (NYSE:MON) this morning saying they believe this week’s share price weakness (i.e., down 20%+) is nothing but market noise and misperceptions and should be thought of as an outstanding buying opportunity. Firm believes that the fundamentals of Monsanto’s business have never been stronger and that the debate around the potential switch of corn acres back to soybean acres in the US has been entirely misconstrued. If one examines which corn acres the farmer will chose to switch back to soybeans, rather than simply assuming the farmer switches “average” acres, the informed conclusion is actually that a switch from corn to soybeans should actually be a good thing for Monsanto.
Put simply , they do not believe that US farmers will switch biotech corn acres to soybeans. Rather, the firm expects farmers to switch back non-biotech corn acres (of which there were approximately 20 million out of 93 million total planted corn acres last year).
MSCO reiterates their Overweight rating, their $142 price target, their Base Case F2008 EPS estimate of $2.90 and increasingly believes that the risk to that estimate is to the upside (i.e., Bull Case EPS estimate of $3.20).
Notablecalls: I like this call. A lot. Suspect MON stock will rebound considerably in the n-t.