We maintain our Outperform recommendation on Monsanto Company (MON) based on the optimism of the company's continued product development through biotechnology and breeding research. Monsanto's future contracts and hedging mechanism look encouraging toward ensuring uninterrupted seed supply throughout all seasons.
Management noted that that the company improved in its core U.S. business on the strength of new corn and soybean products and seems to have captured global growth opportunities, most notably in Latin America. This, in turn, should bode well for future growth.
Monsanto's current trailing 12-month earnings multiple is 25.1x compared with 16.2x for the industry average and 16.3x for S&P 500. Our $88.00 target price, 25.7x 2012 EPS, reflects our Outperform recommendation.
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