Ahead of the Bell: Scotts Miracle-Gro

NEW YORK - A strong gardening season is already reflected in the value of Scotts Miracle-Gro Co. stock, an analyst said Monday, downgrading the garden and lawn care products supplier.

Scotts Miracle-Gro stock is up 16 percent this year, according to Thomson Reuters data. SunTrust Robinson Humphrey analyst William Chappell said the gardening season typically ends in July. Results from the typically weaker fourth quarter, which ends Sept. 30, will not propel the stock higher, he said.

Chappell downgraded Scotts Miracle-Gro to "Neutral" from "Buy."

Scotts Miracle-Gro shares slipped 2.5 percent, or 86 cents to $33.66 in premarket trading Monday. They have changed hands between $16.12 and $39.06 in the past 12 months.

However, Jefferies & Co. analyst Douglas Lane upgraded his earnings estimates for 2010. He urged investors to buy shares ahead of the release of third-quarter financial results later this summer, which are expected to show growth from last year.

Scotts Miracle-Gro had last month raised its profit view to $2.35 to $2.45 per share for the year from $2.10 to $2.30 per share. The company said that consumer purchases were up 17 percent from October to May compared to the previous year, and remained strong in early June.

Analysts polled by Thomson Reuters expect earnings per share of $2.45.

In a note to investors Monday, Lane said the company's good 2009 gardening season is the beginning of a "multi-year re-acceleration in growth" after four years of stagnation. He said the company is innovating new products, which should debut starting in 2011, and will gain market share through regionalization efforts.

He boosted earnings estimates to $3 per share in 2010; Chappell sees per-share profit of $2.75 next year.

Wall Street expects earnings per share of $2.84 in 2010.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.