Monsanto Company (MON) is a leading global provider of agricultural products to farmers. But an intense competitive environment and the company’s huge dependence on a few large customers present a risk to its top line.
Monsanto also faces foreign currency risk since a significant portion of its income comes from outside the U.S. We reiterate our Underperform recommendation on the stock based on weak results for three consecutive quarters. We believe this will continue based on the 2010 guidance provided by management, which is 43% lower than fiscal 2009.
Our long-term Underperform recommendation on the stock indicates that we feel it will perform below the broader market. Our $41.00 target price, 16.4X 2011 EPS, reflects this view.