What Analysts Think Of Monsanto's Earnings

"Monsanto Company MON earnings update reinforces our bearish view of the stock, highlighting continued (and worsening) weakness in glyphosate and weak GM seed pricing," analysts at Bernstein said in a note out Thursday.

The agrochemical and agricultural biotechnology shares closed at $95.21 on Wednesday after the company announced it would slash 1,000 jobs, while executing its cost-cutting expansion plan to deal with challenging sales of biotech-corn seeds and financial headwinds. Monsanto's additional layoffs will eliminate 3,600 jobs over the next two years, an estimated 16 percent of its global workforce.

This coincides with better-than-expected Q1 earnings and a sales' miss.

Below are recent ratings and justifications from the Street on the issue.

Bernstein

Bernstein reiterated an Underperform rating for the company with a price target of $84.00.

The company, according to the same note, lowered fiscal year guidance expectations in the direction of the lower end of their previous guidance of $5.10–$5.60 EPS. The investment management and research firm added this was mainly due to "adverse currency" effects.

Related Link: Will Monsanto Engineer Growth In 2016?

The research firm sees $5.10 as "hard to achieve," commenting, "Glyphosate pricing and increasing competition in seeds weighing heavily on the outlook," the firm commented.

Credit Suisse

Analysts at Credit Suisse issued an Outperform rating for Monsanto with a price target of $109.00 on Thursday.

"We thus adjust our 2016 est. to $5.05 (from $5.15) and our 2017 est. to $6.00 from ($6.05). We note that within our '17 EPS est., we have not embedded any FX improvement or glyphosate pricing; we expect MON to face the full $0.70 FX headwind in '16," the firm commented.

Barclays

Barclays Capital issued an Equal Weight rating with a price target of $100.00.

The firm is "skeptical" around Monsanto's ~20 percent annual EPS growth forecast in the coming years. Barclays also reduced its 2016 EPS estimate by 10c to $5.10 as a result of increasing currency headwinds offset by Intacta benefits and better cost realization.

"[G]iven the underlying $4.50 corn price assumption in the guidance (as our sub $3 corn thesis is still our base case). We reduce our PT to $100, or ~20x our new 2016 EPS," the firm commented.

Deutsche Bank

Deutsche Bank analysts issued a Buy rating with a price target of $110.00 for the company.

"With Monsanto's R&D Pipeline update highlighting the company's expanding competitive advantage and valuation of 18.3x ‘16E EPS an attractive 17 percent premium to the S&P vs a 5-yr avg premium of 50 percent, Buy," the firm noted in the report.

Image Credit: "Burgerinspectie bij Monsanto Enkhuizen 2010-11-02 a" by Luther Blissett - Flickr: DSC07535. Licensed under CC BY-SA 2.0 via Wikimedia Commons.
Posted In: BarclaysBernsteinCredit SuisseDeutsche BankAnalyst ColorLong IdeasNewsPrice TargetReiterationAnalyst RatingsTrading Ideas