Thursday, September 2, 2010

Morgan Joseph Maintains "Buy" on Monsanto (NYSE:MON)

Morgan Joseph reiterated its "Buy" rating on Monsanto (NYSE: MON), while having a price target of $60 on the seed company.

"We believe any weakness in Monsanto's share price, as we witnessed this week, is a great opportunity to buy this unusual stock, as, in our thinking, not only has management overcome a lot of bad news, but it has also developed a dramatic line of growth into the future," said a Morgan analyst.

Revenue doesn't seem to be the problem, but margins and earnings, as pressures on Roundup from patents ending, along with being forced to lower new seed product prices in response to outcry's from farmers, and Dupont (NYSE:DD) marketing their seeds as low-cost alternatives.

Another factor is the cost of research in development, which is the key to future success for Monsanto, but which also cuts into margins and earnings as well.

DuPont is putting the question in the minds of farmers whether or not that added traits of Monsanto seeds are worth the additional costs.

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