Financial Trading Blog
Stock of the day 23/06/2016 – Monsanto Co
Up until the middle of May Monsanto wasn’t enjoying a particularly stellar 2016. Its Q1 figures at the start of January only exacerbated its early in the year decline, with the company cutting another 1000 jobs on top of the 3600 announced the previous October following a quarterly loss of $253 million off of a 23% slide in sales to $2.2 billion. The stock continued to bounce between $85 and $95 as the year went on, its Q2 report even more of a damp squib that the update in January, Monsanto seeing a total sales drop of 13% to $4.53 billion alongside a 26% drop in profits to $1.06 billion (both missing analysts’ estimates).
(Source: IT-Finance.com 23/06/2016)
Yet Monsanto’s year completely changed on May 12th, as it was revealed that German giant Bayer was exploring a $40 billion bid for the company that would create the world’s largest supplier of seeds and farm chemicals. This sent Monsanto shooting up over 10% to $103, a price the stock hadn’t seen since August 2015, before climbing even higher as Bayer revealed a super-sized $62 billion bid. Interestingly Monsanto continued to rise even as it rejected that $122 per share offer, eventually hitting a 2016, and 12 month, peak of $113.17 by the end of May. Monsanto sits at a current trading price of $107.11 (IT-Finance.com, 23/06/2016).
In terms of Monsanto’s third quarter report investors will likely be more interested to hear about any progress with Bayer (with the two companies still open to talks) than they will the company’s actual figures. However, the stock may still be in for a bit of a fall if it sees yet another update that misses estimates, especially since its sales decline has shown no sign of slowing down.
Monsanto Co has a consensus rating of ‘Hold’ with an average target price of $105.53.
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