This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Monsanto: The Dark View

(Monsanto story updated with further analyst commentary.)

NEW YORK ( TheStreet) -- According to the prevailing wisdom on Wall Street, Monsanto (MON - Get Report) has moved in the right direction as it strives to revive itself after an ugly debut for its crucial new bioengineered corn in 2010.

Last year, after a rebellion among its farmer-customers forced the company to cut prices for its latest test-tube maize, Monsanto had to repeal the ambitious growth goals it had set for the next three years. Its stock fell 20% in 2010.

With the dawn of a fresh year, investors appear to have put much of that bad news behind them. Monsanto's efforts to right itself are only a small part of the reason, of course. An unprecedented farm boom, driven by inflating agricultural commodities prices the world over, has lifted Monsanto stock out of its doldrums. Since bottoming out near $48 in October, shares of the St. Louis company have gained 40% and touched a 52-week high of about $77 on Feb. 2. Midday Thursday on the New York Stock Exchange, they were trading at $70.25.

Many sell-side analysts are bullish on Monsanto. Of the 22 who cover the controversial crop-seed and chemicals giant, nine have the equivalent of buy ratings on the stock, while 12 maintain hold or neutral ratings.

The latter group includes Horst Huenikin, of Stifel Nicolaus in Toronto, who feels the Monsanto stock has too ripe a multiple at the moment, having reached a P/E ratio of 23, based on the company's guidance for calendar 2011 earnings. "That number is fair, but it's certainly not undervalued," he said. "On the other hand, it's not so extreme to tell people to dump the stock either."

And then there's the analyst who does have a "sell" rating on Monsanto -- the outlier uber-bear and constant contrarian who has had a negative view of the company for nearly two years.

His name is Paul Christopherson, and he works for Gilford Securities, the small New Jersey broker-dealer perhaps best known as the place where a young Jim Chanos cut his teeth as a short seller.

>>5 Agriculture Stocks That Analysts Love

Though Christopherson doesn't advise shorting Monsanto's stock, the idea implicit in his negative recommendation is, theoretically, to do just that -- a trade that would take some blue-ribbon cajones, or a severe bout of madness, here amid one of the greatest agricultural booms of all time. Not many have been that brave or that crazy: as of Feb. 15, short sellers commanded only 1% of Monsanto's float.

As Christopherson wrote in his latest Monsanto missive, released earlier this week, "In the near term, Monsanto will benefit greatly from the recent reflation of what is, in this analyst's opinion, a commodities bubble, especially in corn and soybeans."

With market momentum in commodities squarely to the upside, "that's my only hesitation about being short," he said in an interview.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
DD $66.46 -1.50%
MON $94.27 0.29%
SYT $80.10 -0.42%
AAPL $95.03 -2.90%
FB $116.73 7.20%


Chart of I:DJI
DOW 17,830.76 -210.79 -1.17%
S&P 500 2,075.81 -19.34 -0.92%
NASDAQ 4,805.2910 -57.85 -1.19%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs