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Analyst Blog

Shares of Monsanto Company (MON - Analyst Report) touched a new 52-week high of $114.83 during the trading session on Dec 20, before closing the day at $113.73, which reflects a solid year-to-date return of 19.7%. The average volume aggregated 1.9 million shares. This Zacks Rank #3 (Hold) agricultural chemicals stock has the wherewithal for further accretion. This is reflected by an expected long-term earnings growth rate of 13.5%.

Growth Drivers

Monsanto is augmenting market presence both organically and inorganically. Recently, the company collaborated with Denmark-based biotech major Novozymes to discover, develop and commercialize microbial solutions for farmers. This collaboration will enable the farmers to boost crop productivity with less effort.

Additionally, in November, Monsanto entered into an agreement to acquire the assets of The Climate Corporation for $930.0 million in cash. Climate Corporation provides unique software and insurance products to farmers, to protect and improve various farming operations. The acquisition will enhance Monsanto’s Integrated Farming Systems platform and is likely to expand its research and expenditure pipeline as well. The acquisition is expected to consummate in the fiscal first quarter of 2014.

With such initiatives, we expect the company to fare well in the subsequent quarters. Monsanto is likely to release its fiscal first-quarter 2014 results on Jan 8. The Zacks Consensus Estimate for the soon-to-be-reported quarter stands at 65 cents, reflecting a year-over-year growth rate of 5.5%. 

Other Stocks to Consider

Monsanto currently has a market capitalization of $59.8 billion. Some better-ranked stocks in the industry include The Andersons, Inc. (ANDE - Analyst Report), American Vanguard Corp. (AVD - Snapshot Report) and Cosan Ltd. (CZZ - Analyst Report). While Andersons and American Vanguard have a Zacks Rank #1 (Strong Buy), Cosan holds a Zacks Rank #2 (Buy).

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