UPDATE: J.P. Morgan Cutting Price Target On Monsanto (MON)

J.P. Morgan Chase & Co. is cutting its estimates on shares of Monsanto MON to $65 from $70, and is keeping its Neutral rating on shares. In a note to investors, J.P. Morgan writes, "We believe it will be difficult for Monsanto shares to exceed market returns over its F2H11 (ends August). The largest part of Monsanto's operating profit growth in F2011 is unlikely to stem from its higher multiple Seeds and Genomics operations but from an earnings rebound in its lower multiple Agricultural Productivity businesses (Roundup and selective herbicides). We expect Seeds and Genomics operating profits to rise at a moderate 5.5% pace in F2011 from $1.83bn to $1.93bn. Operating profits in Ag Productivity by contrast could about triple in F2011 from F2010's distressed level of $67mn to $238mn. Monsanto tends to emphasize its “mid-teens earnings opportunity in 2011.” That opportunity perhaps overstates the normalized underlying EBIT growth pattern. Monsanto's challenge over a multi-year period is to accelerate EBIT growth in Seeds and Genomics to a greater than 10% rate in a base case of little acreage growth from current levels, higher commodity seed costs, and incremental rather than fundamental new growth entities in its product portfolio. In future years it is unlikely to have meaningful earnings assistance from depressed comparisons in Ag Productivity. We trim our F2011 EPS from $2.85 to $2.80; our F2012 remains $3.20." Shares of MON lost $4.16 yesterday to close at $69.16, a loss of nearly 6%.