Stifel: Higher Corn Prices Dominate Monsanto's Q1 Print

Monsanto Company MON will report its first quarter earnings on Wednesday, January 7, before market open. Paul Massoud of Stifel commented on the company's upcoming results in a note to clients on Wednesday. “We believe Monsanto will continue to drive higher seed pricing in 2015 through mix-lift upgrades,” Massoud wrote. “In our view, investor concern over a year over year decline in U.S. planted acreage is overstated, given the recent improvement in corn prices.” Massoud notes that at today's corn price of $4.09/bu, farmers could generate profits of $19 per acre. The December 2015 corn price of $4.33/bu implies even higher returns at $33 per acre. The analyst adds that 87 million acres of corn will be planted in the U.S. throughout 2015. Massoud estimates first quarter 2015 Corn Seed and Traits revenue will fall 35.0 percent from a year ago to $685 million, while gross margin will read 50.0 percent. The analyst expects the company to earn $0.35 per share in the quarter, in-line with the consensus estimate. For the full year 2015, Massoud expects the company to earn $5.90 per share, ahead of the consensus estimate of $5.88 per share. Shares are Buy rated with a $135 price target.