Monsanto (MON) Stock Declines After Barclays Lowers Price Target

NEW YORK (TheStreet) -- Shares of Monsanto (MON) are falling, down 0.88% to $104.29, after Barclays lowered its price target to $125 from $128 while maintaining its "equal weight" rating.

The company reported its third quarter earnings results on June 24, with revenue of $4.6 billion, or $2.39 earnings per share, compared to revenue of $4.2 billion, or $1.62 earnings per share in the same period last year.

Monsanto will continue to be challenged... that a smaller production crop in 2015 will lead to higher COGS per unit in 2016 hitting margins 1% to 2%, Barclays noted.

"Declines of corn seed production, coupled with a greater chance of price and mix down in 2016 than 2015, means continued pressure in corn gross profit," Barclays analysts said.

Monsanto is a provider of agricultural products that produces seeds, biotechnology trait products, and herbicides provide farmers with solutions to improve productivity, reduce the costs of farming, and produce better foods for consumers and better feed for animals.

Separately, TheStreet Ratings team rates MONSANTO CO as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate MONSANTO CO (MON) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, expanding profit margins and notable return on equity. We feel its strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 13.2%. Since the same quarter one year prior, revenues slightly increased by 7.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • MONSANTO CO has improved earnings per share by 47.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, MONSANTO CO increased its bottom line by earning $5.13 versus $4.56 in the prior year. This year, the market expects an improvement in earnings ($5.75 versus $5.13).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Chemicals industry. The net income increased by 33.0% when compared to the same quarter one year prior, rising from $858.00 million to $1,141.00 million.
  • The gross profit margin for MONSANTO CO is rather high; currently it is at 63.59%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 24.91% significantly outperformed against the industry average.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to other companies in the Chemicals industry and the overall market on the basis of return on equity, MONSANTO CO has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
  • You can view the full analysis from the report here: MON Ratings Report

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