Goldman Sachs Has Buy Rating On Monsanto (MON)

Goldman Sachs has a Buy rating and a $80 price target on shares of Monsanto MON. In a note to investors, Goldman writes, "This morning MON announced that it has obtained regulatory approval for SmartStax to be offered in a RIB (refuge in the bag) formulation. As a reminder, RIB enables the farmer to plant his field from “post to post” without the need to change his seeder for the refuge component since it is pre-mixed in the bag he buys. Farmers value RIB primarily for its convenience and ease of use. MON is the first company to receive regulatory approval for RIB for 5% above and below ground refuge. While RIB approval was expected, it removes a risk from the SmartStax and MON story and sets the stage for solid EPS growth in FY12 driven by positive mix shift to higher value added (and higher margin) products like SS RIB. Furthermore, the timing of the announcement was earlier than expected (by 1-2 months), which puts MON in a better position to have RIB available for almost the full slate of around 100 SS hybrids for the 2012 planting season. As a result, we now expect higher SS RIB sales in 2012 (at higher price points and margins than regular SS and competing triples) and we are increasing our FY2012 EPS estimate by $0.03 to $3.57. Our new FY12 EPS estimate is $0.21 above consensus. We believe that consensus is focusing too much on like-vs.-like pricing, underestimating the benefit to margin from mix shift to newer, higher margin products like SS RIB, TriplePro, and RR2. Based on conversations with farmers (such as last week's conference call between farmers and investors that we hosted) we think that SS RIB acres could surprise to the upside in 2012." Shares of MON are up 63 cents in early Tuesday trading to $67.80, a gain of nearly 1% this morning.