Jefferies Lowers Price Target on Monsanto (MON)

Jefferies and Co. is out with a research report this morning, where it reiterated its Hold rating on shares of Monsanto MON; it has a $52.00 price target on the stock, down from $56.00. The Jefferies analysts said, “Monsanto announced Q3 EPS of $0.81, $0.01 above consensus. Monsanto continues to expect full-year 2010 adjusted EPS in the range of $2.40-$2.60 and free cash flow in the range of $400-$500m. We are maintaining estimates and lowering our target $4 to $52.” The analysts added, “Excluding $0.11 from restructuring, Monsanto reported Q3 EPS of $0.81, $0.01 above consensus and our forecast. Versus our estimate, the beat was driven by Seeds & Genomics ($0.09/share), taxes ($0.07), and lower interest expense ($0.01), mostly offset by headwinds from Ag., productivity ($0.17) and higher minority interest ($0.01). Seed gross margins of 59.5% were 350bps worse than expected, mostly due to lofty new product launch costs and unfavorable hedges in corn and soy.” They also noted that, “Monsanto's targets for 2012 for product profitability appear to imply a price range of $120-$129/acre for Smartstax in 2012 (down 1-8% vs. 2010) and $102-$110/acre for VT Triple PRO (down 3% to up 5% vs. 2010). In our view, there remains little room for further discounting if SmartStax will remain accretive compared to the VT triple product family.”