Shares of Monsanto (NYSE:MON) are trading down today even though they met expectations for the quarter. Some appear to believe by not having a blowout quarter the company's guidance will be somewhat weaker as the year goes on.
For the quarter Monsanto generated a profit of $1.02 billion, or $1.88 a share, up from $887 million, or $1.60 a share, last year in the same quarter, a gain of 15 percent. Net sales jumped 6.1% to $4.13 billion.
Concerns were somewhat allayed over the performance of SmartStax, its high-end biotech corn seed, which struggled last year because of high prices and a weaker economy at the time. Rival DuPont (NYSE:DD) was able to gain some share by offering a lower price alternative with less traits, which some farmers gravitated to.
Monsanto said now sales are on track to meet the goal of having the seed planted in "mid-teens" millions of acres in the U.S. Soybean sales are also said to be on track to meeting company goals.
Farmers also have more money this year, reducing their resistance to price, and Monsanto was able to increase gross margins from 54 percent to 55.9 percent as a result.
Hugh Grant, chairman and chief executive of Monsanto, said in a statement, "We have the right pieces and the right execution to feel very good that mid-teens earnings growth in 2011 is on track."
Monsanto boosted its full-year free cash flow guidance for the fiscal year to $900 million to $1.1 billion from $800 million to $900 million.
Monsanto was trading at $70.24, falling $3.08, or 4.20 percent, as of 11:52 AM EDT.
Showing posts with label SmartStax. Show all posts
Showing posts with label SmartStax. Show all posts
Wednesday, April 6, 2011
Monday, December 20, 2010
Monsanto (NYSE:MON), Dow (NYSE:DOW) Get Competition from DuPont (NYSE:DD), Syngenta (NYSE:SYT) on SmartStax
DuPont (NYSE:DD) has licensed Syngenta's (NYSE:SYT) corn rootworm trait MIR604 in order to compete more effectively against Monsanto (NYSE:MON) and Dow Chemical (NYSE:DOW) and SmartStax.
Pioneer Hi-Bred, which is wholly-owned by DuPont, will market and sell the seed for them.
By combining Syngenta's corn rootworm trait MIR604 with Acremax XTRA, Dupont's Pioneer should be able to compete against SmartStax, as it would offer above ground and below ground action.
That should allow Pioneer to win regulatory approval for 5% integrated refuge product, which would provide the type of convenience that is offered by SmartStax.
Pioneer is working toward having the hybrids on the market for 2012-2013.
With it being vital for DuPont to have a product that can compete against SmartStax, they're going to have to pay a hefty price to get it via the licensing agreement with Syngenta, which says may end up being more than $400 million via cumulative payments.
Eventually Dupont may choose to use its own proprietary trait to replace MIR604, but that wouldn't happen for several years if they choose to go that route.
DuPont closed Friday at $49.86, up $0.41, or 0.83 percent. Dow closed at $33.94, down $0.40, or 1.16 percent. Monsanto closed at $64.60, gaining $1.60, or 2.54 percent. Syngenta closed at $56.99, down $0.39, or 0.68 percent.
Pioneer Hi-Bred, which is wholly-owned by DuPont, will market and sell the seed for them.
By combining Syngenta's corn rootworm trait MIR604 with Acremax XTRA, Dupont's Pioneer should be able to compete against SmartStax, as it would offer above ground and below ground action.
That should allow Pioneer to win regulatory approval for 5% integrated refuge product, which would provide the type of convenience that is offered by SmartStax.
Pioneer is working toward having the hybrids on the market for 2012-2013.
With it being vital for DuPont to have a product that can compete against SmartStax, they're going to have to pay a hefty price to get it via the licensing agreement with Syngenta, which says may end up being more than $400 million via cumulative payments.
Eventually Dupont may choose to use its own proprietary trait to replace MIR604, but that wouldn't happen for several years if they choose to go that route.
DuPont closed Friday at $49.86, up $0.41, or 0.83 percent. Dow closed at $33.94, down $0.40, or 1.16 percent. Monsanto closed at $64.60, gaining $1.60, or 2.54 percent. Syngenta closed at $56.99, down $0.39, or 0.68 percent.
Tuesday, November 16, 2010
Monsanto (NYSE:MON) Needs to Show it Can Grow Corn Seed Share
Even though Monsanto (NYSE:MON) has received a boost recently when field results revealed their SmartStax corn yields were better than competitors after earlier tests were disappointing, that may not be enough of a catalyst to push the company forward, are expectations are they'll have to prove they can grow their share in corn seeds, as they lost some to competitors over the last year.
Now the question they must answer is also if the improved results are worth the premium cost of the seeds, something DuPont (NYSE:DD) has successfully created doubt about in a significant number of farmers, helping them grow share..
Deutsche Bank (NYSE:DB) believes they'll struggle over the next year to do that, and downgraded Monsanto from "Buy" to "Hold."
“We are downgrading Monsanto to Hold as the shares are within 5% of our target and we see few near-term catalysts. While last week’s yield data put to rest lingering doubts over Monsanto’s next generation seeds, with the shares trading at a 70% premium to the S&P 500 we believe upside is limited over the next 3-6 mos. Over the next 6-12 mos, we believe Monsanto needs to grow volume and/or gain share in US corn for the shares to outperform. However, with competitors also targeting share gains in ‘11, we believe this could be a challenge," said Deutsche.
Deutsche Bank analyst David Begleiter added, “The key for Monsanto shares to outperform over the six to twelve months is for Monsanto to translate these advantages into volume growth and share gains in the key U.S. corn seed market."
Last quarter George Soros added a significant number of Monsanto shares to his fund.
Monsanto closed Monday at $60.79, falling $1.36, or 2.19 percent.
Now the question they must answer is also if the improved results are worth the premium cost of the seeds, something DuPont (NYSE:DD) has successfully created doubt about in a significant number of farmers, helping them grow share..
Deutsche Bank (NYSE:DB) believes they'll struggle over the next year to do that, and downgraded Monsanto from "Buy" to "Hold."
“We are downgrading Monsanto to Hold as the shares are within 5% of our target and we see few near-term catalysts. While last week’s yield data put to rest lingering doubts over Monsanto’s next generation seeds, with the shares trading at a 70% premium to the S&P 500 we believe upside is limited over the next 3-6 mos. Over the next 6-12 mos, we believe Monsanto needs to grow volume and/or gain share in US corn for the shares to outperform. However, with competitors also targeting share gains in ‘11, we believe this could be a challenge," said Deutsche.
Deutsche Bank analyst David Begleiter added, “The key for Monsanto shares to outperform over the six to twelve months is for Monsanto to translate these advantages into volume growth and share gains in the key U.S. corn seed market."
Last quarter George Soros added a significant number of Monsanto shares to his fund.
Monsanto closed Monday at $60.79, falling $1.36, or 2.19 percent.
Thursday, January 8, 2009
Monsanto More than Doubles Profits in Fiscal-first Quarter
The fiscal-first quarter for Monsanto Co. (MON) couldn't have been much more profitable, as the biotechnology company more than doubled profits.
Most of that was driven by glyphosate-based weed killer "Roundup" sold in Latin America, along with overall corn seed sales.
Another factor in the solid profits was the pricing strategy implemented by Monsanto, as they increased corn seed prices by between 15% to 20% while looking to increase prices this year by up to 25%, said the company.
For Monsanto and other companies, the question becomes whether the price increases will be able to hold, as their original increases came before commodities got hit hard. If commodities don't come back fairly quickly, it'll be hard to maintain those increases in a soft market.
If that doesn't happen soon, management of costs will be a significant factor in Monsanto's profits going, as they may have to cut their projected price increases if farmers aren't able or willing to pay Monsanto's wanted price.
Another concern in the sector is the very real possibility of a worldwide seed pricing war, which according to Monsanto CEO Hugh Grant, they won't participate in, and will hold their projected pricing to maintain their margins.
The thought there is competitors will be forced to revert to increasing prices even if they gain some temporary market share, as it'll cut significantly into profits. That seems to be a risky strategy, but at the same time it's also risky for competitors over the long haul.
For the fiscal first quarter ending November 30, net income surged from $256 million last year to $556 million this year. Sales grew to $2.65 billion for a record first quarter, an increase of 29 percent.
The company also increased its guidance to a range of $4.40 to $4.50 from $4.20 to $4.40 on an ongoing basis.
Going forward, Monsanto is continuing on with its strategy of introducing its SmartStax corn seed, which include eight genetic changes, and developed to take the place of triple-stack corn seeds.
The drought-tolerant corn of Monsanto is also near the end of its research and development stage, and is awaiting approval from the U.S. Food and Drug Administration. Assuming approval from the USDA and targeted nations, seed is scheduled to be marketed in 2012.
Even with the great news of Monsanto's performance, the key going ahead is whether they can maintain their aggressive pricing without losing significant market share. Increased supply into the market and competitors' responding by lowering prices could put downward pressure on profits for the company.
Still, to perform like they have under these economic conditions is quite an accomplishment. Long term they seem to be a solid company to invest in.
Most of that was driven by glyphosate-based weed killer "Roundup" sold in Latin America, along with overall corn seed sales.
Another factor in the solid profits was the pricing strategy implemented by Monsanto, as they increased corn seed prices by between 15% to 20% while looking to increase prices this year by up to 25%, said the company.
For Monsanto and other companies, the question becomes whether the price increases will be able to hold, as their original increases came before commodities got hit hard. If commodities don't come back fairly quickly, it'll be hard to maintain those increases in a soft market.
If that doesn't happen soon, management of costs will be a significant factor in Monsanto's profits going, as they may have to cut their projected price increases if farmers aren't able or willing to pay Monsanto's wanted price.
Another concern in the sector is the very real possibility of a worldwide seed pricing war, which according to Monsanto CEO Hugh Grant, they won't participate in, and will hold their projected pricing to maintain their margins.
The thought there is competitors will be forced to revert to increasing prices even if they gain some temporary market share, as it'll cut significantly into profits. That seems to be a risky strategy, but at the same time it's also risky for competitors over the long haul.
For the fiscal first quarter ending November 30, net income surged from $256 million last year to $556 million this year. Sales grew to $2.65 billion for a record first quarter, an increase of 29 percent.
The company also increased its guidance to a range of $4.40 to $4.50 from $4.20 to $4.40 on an ongoing basis.
Going forward, Monsanto is continuing on with its strategy of introducing its SmartStax corn seed, which include eight genetic changes, and developed to take the place of triple-stack corn seeds.
The drought-tolerant corn of Monsanto is also near the end of its research and development stage, and is awaiting approval from the U.S. Food and Drug Administration. Assuming approval from the USDA and targeted nations, seed is scheduled to be marketed in 2012.
Even with the great news of Monsanto's performance, the key going ahead is whether they can maintain their aggressive pricing without losing significant market share. Increased supply into the market and competitors' responding by lowering prices could put downward pressure on profits for the company.
Still, to perform like they have under these economic conditions is quite an accomplishment. Long term they seem to be a solid company to invest in.
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