On Oct 8, 2013, we reiterated our Neutral recommendation on
), based on mixed result for the fourth quarter of fiscal
Why the Retention?
Monsanto is a leading global provider of agricultural
products. The company's research and development (R&D)
line-ups in molecular-bred hybrid technologies as well as
technical collaboration with agri-business research firms
continue to support sustainability and modernization in cropping
pattern for long-term growth. With the Intacta technology gaining
momentum in Brazil and Argentina, we expect Monsanto to be able
to generate higher revenues in the coming quarters.
Additionally, Monsanto has strong cash and cash equivalents
balance, which the company intends to utilize for share buybacks,
thereby increasing shareholders' value. The proposed acquisition
of The Climate Corporation also strengthens our belief on the
company's future. The integration of Climate's technology will
help Monsanto to expand its Integrated Farming Systems platform
along with expanding the R&D pipeline.
However, the company incurs massive time and expenses toward
R&D activities, which makes them high priced, thereby
exposing the company to major price competition from local
Monsanto's overseas operations expose it to foreign currency
fluctuation risk. Further, the foreign operational hazards
including changes in local, political or economic conditions;
governmental policies and pricing directives; as well as import
and trade restrictions in foreign nations add to the peril.
Moreover, the increased societal/governmental resistance to
genetically modified crops and farmers' reluctance to accept new
products remain the major offsetting factors.
Other Stocks to Consider
Monsanto currently carries a Zacks Rank #3 (Hold). Other
stocks worth a watch in the industry include
Air Products & Chemicals Inc.
). While Limoneira and Ferro Corp. carry a Zacks Rank #1 (Strong
Buy), Air Products & Chemicals carries a Zacks Rank #2
AIR PRODS & CHE (APD): Free Stock Analysis
FERRO CORP (FOE): Free Stock Analysis Report
LIMONEIRA CO (LMNR): Free Stock Analysis
MONSANTO CO-NEW (MON): Free Stock Analysis
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