Agro Sector Ideas

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>>> Scotts Miracle-Gro downgraded on headwind concerns


By Tonya Garcia

June 20, 2018


https://www.marketwatch.com/story/scotts-miracle-gro-downgraded-on-headwind-concerns-2018-06-20?siteid=bigcharts&dist=bigcharts


Scotts Miracle-Gro Co. SMG, +0.55% was downgraded to underperform from market perform at Raymond James on concerns that expectations are too high to overcome near-term challenges. Raymond James analysts identify four headwinds: the elimination of a $20 million annual payment from Monsanto/Bayer AG BAYN, +1.75% after a revised marketing agreement; $20 million higher commodity and transportation costs; $20 million more in incentive compensation; and $20 million more in wage and benefit inflation. Pricing, volumes and other factors are not expected to offset those headwinds. "[W]e should note that all of the year-over-year improvement relates to Scotts Miracle-Gro's recent acquisition of the Sunlight Supply hydroponics business, which is expected to be dilutive this year and accretive next," wrote Joseph Altobello in a note. "Conversely, we expect no meaningful base profitability improvement next year for the combined U.S. Consumer and legacy Hawthorne hydroponics businesses." Scotts Miracle-Gro shares are down 0.2% in Wednesday premarket trading, and down nearly 23% for 2018 so far. The S&P 500 index SPX, +0.33% is up 3.3% for the year to date.

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