Seed maker Monsanto Company (MON) on Wednesday caught some tepid commentary from analysts at Jefferies & Co.
The firm maintained its “Overweight” rating on MON but lowered its price target from from $97 to $92. That new target still suggests a healthy 29% upside to the stock’s Tuesday closing price of $71.30, however.
A Piper Jaffray analyst commented, “As valuation multiples have compressed in the agriculture sector (as well as large cap biotech — a commonly used peer group for MON shares), scrutiny around the sustainability of MON’s premium multiple has intensified. In this note, we revisit our Overweight thesis on MON shares and outline how Monsanto is positioned to deliver at least mid-teens annual earnings growth over the next 3 years, which should be supportive of sustained P/E valuations. Latin America will continue to be a key profit growth driver over the next 2 years – a factor that we believe investors under-estimate. Following a review of Monsanto’s R&D pipeline, we provide a framework to value this pipeline — which we believe is worth approximately $13 per share.”
Monsanto shares were mostly flat in premarket trading Wednesday.
The Bottom Line
Shares of Monsanto (MON) have a 1.68% dividend yield, based on last night’s closing stock price of $71.30. The stock has technical support in the $66-$70 price area. If the shares can firm up, we see overhead resistance around the $75-$78 price levels.
Monsanto Company (MON) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.3 out of 5 stars.