On Jun 14, 2013, we reaffirmed our long-term Neutral
) as risk reward remains fairly balanced for the stock at this
Why the Reiteration?
Syngenta reported improved year over year sales for the first
quarter of 2013, with sales increasing 6% to $4.6 billion. The
increase in total revenue was helped by a rise in revenues across
most regions, viz., Latin America, Eastern Europe and Southeast
Asia. Increased prices in both Crop Protection and Seeds business
segments also boosted revenues.
It has now become a trend for agricultural companies to keep
launching newer products at regular intervals in order to stay
ahead of their competitors. Syngenta received an approval for its
rootworm control technology, Agrisure Duracade, in the reported
quarter, and is expected to launch the same in 2014. Syngenta
maintains long-term sales growth target of 8.0%, which it expects
to be hurt by higher seed production costs.
Additionally, Syngenta focuses on acquisitions to enhance its
technologies, product offerings and to gain a greater market
share. In 2012, the company completed several acquisitions, the
major ones being the acquisitions of Devgen N.V., DuPont's
insecticide business; Pasteuria Bioscience Inc. and Sunfield
Seeds Inc. All these acquisitions are expected to contribute
significantly to the revenue.
However, we cannot overlook the fact that agricultural
companies are exposed to a number of environmental and safety
risks, which increase the costs for these companies and Syngenta
is no exception. Moreover, the time and resources involved in the
innovations may sometimes prove to be futile.
Other Stocks to Consider
Syngenta currently carries a Zacks Rank #3 (Hold). Some
agricultural products companies worth a look are
American Vanguard Corp.
), which carries a Zacks Rank #1 (Strong Buy); while
) both carry a Zacks Rank #2 (Buy).
AMER VANGUARD (AVD): Free Stock Analysis
COSAN LTD-A (CZZ): Free Stock Analysis Report
LIMONEIRA CO (LMNR): Free Stock Analysis
SYNGENTA AG-ADR (SYT): Free Stock Analysis
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