Piper Jaffray Highlights Monsanto's Upcoming Catalysts

Despite Monsanto's MON strong performance in recent weeks, Piper Jaffray still sees several catalysts over the next 6-12 months to support further upside to the stock. Piper's upcoming visit to Monsanto's R&D labs will likely provide evidence of the long-term growth potential of the seed & traits segment. It also believes elevated corn prices will lead to a favorable shift toward corn acreage, which could provide near-term upside. Within the current R&D pipeline portfolio, we believe that drought-tolerant corn and nitrogen-utilization corn offer the most compelling new market opportunities. Monsanto estimates that these two families of seed offer revenue potential in the U.S. alone of $500 million to $1 billion by 2020. Drought tolerant seed will be beta tested next year in Western Cornbelt growing areas, and will begin generating tangible revenue in 2013. The strength of the Fall order book provided good visibility and we believe continued high grain prices will set a positive backdrop for the seed producers as planting season approaches. We believe the 2011 season will demonstrate Monsanto's return to solid execution, which will allow investors to begin looking longer term toward the company's healthy pipeline of new seed products. Piper Jaffray reiterates its Overweight rating and will review its price target following meetings this week. MON closed Friday at $74.33