Monsanto Shares Hit Record on Earnings Outlook


Monsanto shares traded to an all-time record high on Monday after the company raised its 2007 earnings outlook on Monday, citing strong global corn sales and higher prices for its branded Roundup herbicides.

The company said it was seeing "strong, early sales of corn seeds" in Brazil and Argentina that were higher than originally anticipated.

Better-than-expected pricing for its Roundup business is helping drive the gains. Though sales of the company's Roundup agricultural herbicides were flat in the fourth quarter, prices were higher, the company said.

Monsanto also cited a full-year effective tax rate of 30% as contributing to the improved earnings outlook, though officials did not quantify how much that contributed to the improved outlook.

In all, the company hiked its ongoing earnings target to about $2.00 per share from its previous range of $1.75 to $1.80. On that basis, analysts on average had expected the company to earn $1.83 per share in 2007, according to Reuters Estimates.

The company said it sees posting net earnings of about $1.79 per share this year, up from $1.25 in 2006.

"It's a company that is benefiting from a lot of macro trends and it is continuing to be reflected in the company's fundamentals," said Tom Leritz, of Argent Capital Management. "The new source of demand, using corn to produce ethanol... is a big factor."

The improved outlook follows news Friday that Monsanto is teaming with Dow Chemical Co in a licensing agreement aimed at introducing by 2010 corn seed stacked with eight different genetic traits to help farmers fight weeds and insects. The new seeds, called SmartStax, will be the first to contain eight different traits.

In June, Monsanto posted a 71% increase in quarterly profit, largely due to record U.S. corn plantings.

"The company is clearly firing on all cylinders, winning market share in the U.S. and around the world," said Frank Mitsch, managing director of BB&T Capital Markets. "They've got preferred products and preferred germ technology."

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