Monsanto earnings recovery may be better bet than Bayer deal

The return of profit growth at Monsanto Co. next year may be a better bet than a takeover of the world’s largest seed supplier.

The Creve Coeur-based company reports fiscal fourth-quarter earnings on Wednesday morning and is expected to forecast its performance for the year through August 2017. After declining in fiscal 2016 amid depressed crop prices and farmer spending, full-year net income is expected to rebound 43 percent, according to the average of analysts’ estimates compiled by Bloomberg.

Monsanto will benefit from lower production costs, more favorable exchange rates and bigger sales of its new soybean technologies, Susquehanna Financial Group analyst Don Carson said in a report this week. While crop prices are still low and seed prices might not see many gains, farmers will buy more of the company’s newest genetically modified soybean seeds, including Roundup Ready Xtend in the U.S. and Intacta in South America, according to Bloomberg Intelligence analyst Chris Perrella.

That may help Monsanto’s stock price, which has lagged behind Bayer AG’s $128-per-share offer since it was made last month.

Read more: Bloomberg


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