Monsanto shares rise on growth strategy to boost market share abroad
September 28, 2007
Betsy Vereckey/AP Business Writer/September 26, 2007
NEW YORK (AP) — Shares of Monsanto Co. hit a 52-week high on Wednesday, after the world’s largest seed maker said it expects a product, currently in development, to increase market share outside the U.S.
Shares of the St. Louis-based company rose $2.44, or 3 percent, to $83.28 in afternoon trading and reached $84.46 earlier in the day.
Brett Begemann, Monsanto’s executive vice president of global commercial business, said in a Webcast from a Credit Suisse chemical conference that SmartStax, its new corn seed more resistant to bugs and weeds, will help the company grow market share in Argentina and Brazil.
Monsanto and Dow AgroSciences are developing and marketing SmartStax and hope to have the product on the market by the end of the decade.
Begemann said the product cannot be duplicated by other companies and gives Monsanto a “clear competitive advantage” by helping farmers increase productivity as the demand for corn continues to grow worldwide.
Also, Begemann also said cotton remained a good growth opportunity in Asia, especially in India.
Meanwhile, Jefferies & Co. analyst Laurence Alexander began coverage of Monsanto with a “Buy” rating and $100 price target, which implies nearly 24 percent upside to Tuesday’s $80.84 closing price.
Alexander said Monsanto should continue gaining U.S. market share in corn, cotton, fruit and vegetables.
“Market share gains in the U.S. corn market, even as corn plantings hit the highest level in 50 years, supported the shares in 2007 and should contribute in 2008,” Alexander wrote in a client note.
Also, Alexander was upbeat on Monsanto’s research and development efforts, biotech product pipeline, and corn prospects abroad.
Alexander expects full-year 2007 earnings of $2 per share, which is above the $1.96 per share estimate of analysts polled by Thomson Financial.