NEW YORK (TheStreet) -- Bioengineered-crop-seed and weed-killer maker Monsanto (MON) has suffered through a rough few months, with everything from price cuts in the face of customer revolts, profit misses and warnings, ecological condemnation and a federal antitrust probe upending the stock. Since the start of the year, it has lost nearly 44% of its value.
On Wednesday, though, analysts at
-- who must understand a thing or two about highly public denunciation -- placed Monsanto's stock on its vaunted "conviction buy list," essentially arguing that enough is enough.
"We believe the bad news is exhausted," wrote Robert Koort, Goldman's resident agriculture expert, adding that negative sentiment among investors may have bottomed. "With the shares below the $50 mark, now is the time to start building positions."
Koort believes Monsanto's shares will rise by a third -- and likely trade at 18 times Koort's estimate for 2012 earnings of $3.60 a share. He said good news will possibly come when the company conducts its annual "whistle stop tour," a trip executives take with investors and analysts through the farm belt so that Wall Street types can take a gander at the interesting new sci-fi seeds that Monsanto's labs are cooking up.
Koort said that good harvest at the end of this North American growing season could "validate" Monsanto's claims for its super-yielding corn and soybean seeds -- claims that had come
The "key risks" that Koort briefly mentions will continue to loom large for Monsanto, however: crop prices and increased competition on the weed-killer side of things, as well as in the genetically altered seeds and traits business.
Some ag watchers have noted that 2010 is stacking up as a bumper-crop season, which could flood markets with food, depressing crop prices and thus hurting farmers' pocketbooks -- never a ripe prospect for those companies that sell things to farmers.
Monsanto shares were rallying Wednesday morning. The stock was changing hands in recent trades at $50.34, up $1.57, or $3.2%.
-- Written by Scott Eden in New York
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Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining TheStreet.com, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.