Monday, July 12, 2010

Citigroup (NYSE:C) Upgrades Monsanto (NYSE:MON) to "Buy"

Monsanto (NYSE:MON) received some love from Citigroup (NYSE:C) today, as they upgraded the seed giant from "Hold" to Buy."

Citigroup analyst P.J. Juvekar said this, "After being on the sidelines for more than a year we are upgrading MON to a Buy. In addition, we are raising our 2011 EPS estimate to $3.20 from $3.10. With the stock at $51 the risk/reward ratio has become favorable; our analysis yields a downside price of $45 and an upside price target of $62. MON is absolutely the worst performing stock in the group in 2010 – down 37% YTD. Also as corn prices begin to inch up on tighter supply/demand, we think MON shares are poised to benefit. This is NOT a call on corn, but rather a valuation call on MON."

Even so, corn prices do make farmers more receptive to the higher prices of Monsanto products, which has been resisted lately.

That, and expectations Monsanto will cut prices by 5 to 10 percent to boost sales, has made for a more positive valuation environment for the company.

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