Jefferies Sees Upside to Monsanto in 2013; Boosts Estimates, Price Target (MON)

Jefferies Sees Upside to Monsanto in 2013; Boosts Estimates, Price Target (MON)


An analyst at Jefferies commented on Wednesday that he believes Monsanto Company (MON) is in store for positive guidance in the coming years due to strength in the Latin American market.

Monsanto will release its 2013 first quarter earnings report prior to the opening bell on Tuesday, January 8. Wall Street expectations are that the firm will earn 37 cents per share on revenue of $2.64 billion. Looking forward, Jefferies analyst Laurence Alexander says he believes Monsanto is in store for more upside than previous 2013 estimates based on strength in Latin America.

“Based on recent commentary by DuPont and FMC, we believe the Latin American order season could be stronger than we had previously anticipated. Our estimates assume a favorable resolution to regional royalty structures,” Alexander said.

The analyst raised MON fiscal year 2013 earnings estimates from $4.40 per share to $4.50 per share, which would be a +21% increase from the previous year. Looking to 2014 Alexander raised EPS from $5.05 to $5.20, a +16% increase. However, these numbers are contingent on the potential of a strong harvest next summer which would put pressure on crop prices.

Jefferies maintains a “Hold” rating on Monsanto, but raise the price target from $98 to $99. The new target is a +4.6% upside to Monday’s closing price of $94.65.

Monsanto shares were up $1.24, or +1.31%, in premarket trading on Wednesday.

The Bottom Line
Shares of Monsanto (MON) have a 1.58% dividend yield, based on Monday’s closing stock price of $94.65. The stock has technical support in the $85-$87 price area. If the shares can firm up, we see overhead resistance around the $97-$99 price levels.

Monsanto Company (MON) is not recommended at this time, holding a DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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