JP Morgan is out downgrading Monsanto (NYSE:MON) to Neutral from Overweight while lowering tgt to $82 from $100.
According to the firm, EPS issues for Monsanto more concern F2010 than F2009. CEO Hugh Grant emphasized the F2009 glyphosate peak on the conference call and the uncertainties in the rate of gross profit decrease ($0.60 per share) from his $2.4 billion F2009 forecast to the $1.9 billion projection he envisions for 2012. That, in a word, is the primary difficulty in forecasting EPS over a multi-year period for Monsanto. Should the decline occur at once, Monsanto is likely to have a flattish EPS year. Should it happen more gradually, the effects mean less.
A second issue is that Monsanto probably needs to raise corn seed and trait prices 5%-10% in F2010 after a year of roughly 20% increases in F2009....MORENotablecalls: Struggling to decide if this is a significant call or not. The agri chem. analyst team at JPM is pretty well regarded but on the other hand it's kind of difficult to envision Monsanto's growth coming to a halt.
If JPM's right (or if investors think they are right), MON's headed lower. Way lower.
PS: I'm hearing MSCO is out lowering MON tgt to $115 from $170 this AM.
Friday, April 3, 2009
Monsanto: Downgrade to Neutral at JP Morgan (MON)
From Notable Calls: