Monsanto Ups Guidance

Monsanto Company ( MON - Analyst Report ) recently raised its 2012 earnings per share guidance in the range of $3.65 to $3.70 on an ongoing basis and $3.73 to $3.78 on an as-reported basis from its former full-year earnings per share guidance level of $3.49 to $3.54 on an ongoing basis and $3.45 to $3.50 on an as-reported basis. The company’s continued strong third-quarter sales drove management’s year-over-year expectation up 25% for fiscal 2012 and foresees continued strong growth in fiscal 2013 as well.

Monsanto has also projected third-quarter earnings per share of $1.57 to $1.62 on an ongoing basis and $1.69 to $1.74 on an as-reported basis, reflecting full-year expectation of strong performance, rise in seasonal seed sales and discrete tax adjustment. Management, however, narrowed full-year free cash flow guidance to $1.7 billion to $1.8 billion from the previous range of $1.6 to $1.8 billion

Furthermore, the company expects net cash provided by operating activities to be $2.6 billion to $2.8 billion, and net cash required by investing activities to be $900 million to $1 billion for fiscal year 2012. This is compared with the previous projection wherein the net cash provided by operating activities was expected to be $2.5 billion to $2.8 billion and net cash required by investing activities was projected to be in the range of $900 million to $1 billion for fiscal 2012.

Over time, Monsanto has been witnessing upside in volume and a mix benefit within the Seeds and Genomics segment, especially in corn traits. With continued R&D lineups, the company successfully increased their yields, while reducing the use of key resources. Such cost-effective business improvements are anticipated to ensure the above projected growth momentum in 2012, while continuing its success journey in 2013.

The company competes with peers includingSyngenta AG ( SYT - Analyst Report ) and BASF SE ( BASFY ) . We currently maintain a long-term ‘Neutral’ recommendation on the stock. Also, Monsanto has a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating (1-3 months).