Replies to post #43 on Monument Circle Acquisition Corp (MON)

[DewDiligence]

Monsanto Is Sowing the Seeds of Future Growth

[This article is from the current issue of Barron’s. Please see the quiz in #msg-39687555 and my prediction in #msg-39841050, which are germane to the analysts’ EPS forecasts for FY2011 and beyond. For related stories, see #msg-41324910, #msg-38262415, #msg-39551239, #msg-42530685, #msg-40779236, and #msg-41098804. For MON’s financial results and pipeline info, see #msg-42341821 and #msg-43483542.]

http://online.barrons.com/article/SB125937686827167525.html

›NOVEMBER 30, 2009
By KOPIN TAN

Planting seeds is an act of faith, an investment in a future you can't yet see. That's something Monsanto shareholders need to keep in mind.

The agricultural giant is weathering an uncharacteristic dry spell: The 2009 stock-market rally that has lifted everything seems to have shortchanged agriculture, and falling grain prices limit farmers' willingness to pay up for crop seeds. At the same time, Monsanto's profits from selling herbicides have plummeted, while spending is increasing as the company prepares to launch two crucial new batches of genetically modified corn and soybeans.

As a result, the once highflying shares are more earthbound of late. At 80.87, the stock fetches 24 times the depressed profits Monsanto (ticker: MON) is expected to earn in 2010, well below multiples topping 43 merely two years ago. Shares have rallied just 15% over the past year, lagging behind gains of 19% for fertilizer stocks and 18% for agricultural-product companies -- not to mention 30% for the broad market.

Yet Monsanto shareholders who do keep the faith will be rewarded. The stock price may swing with short-term fluctuations in corn or soy prices, "but the embedded value of its premier franchise and its intellectual property shouldn't," says stockholder Harry Rady of Rady Asset Management. "So when the stock trades down with grain prices, I view that as an opportunity." Morgan Stanley analyst Vincent Andrews reckons Monsanto's core business is worth $88 a share and its pipeline of new products adds another $17, which would peg shares at $105, or about a third higher than recent levels.

Before the shares can realize that potential, investors accustomed to steroidal growth from the world's largest producer of genetically tweaked seeds will have to cope with some unfamiliar events: Analysts expect profits to fall 25% in 2010. Blame falls to Monsanto's smaller herbicide unit, which despite rising sales volume has had to slash prices of its premium "Roundup" brand to fight cheaper, generic competition from places like China. This could drive the unit's gross profits below $700 million from $1.84 billion this year.

But seeds are being sown, quite literally, for future growth. Among the new technology Monsanto is marketing is SmartStax corn, which is loaded with the broadest array of genes available for fighting pests both above and below ground and for tolerating pesticides, as well as Roundup Ready 2 Yield soybeans, which promise more beans per pod [#msg-43483542].

Success will boost Monsanto's dominant seeds business, swelling its share of company profits to 85% by 2012 from roughly two-thirds today. More important, it will help win back investors frightened by the weakening herbicide unit and refocus attention on Monsanto's stranglehold on the planet's food chain. The St. Louis company may have been called a factory for "frankenfoods," and criticized for its overzealous policing of its intellectual-property rights, but Monsanto remains the name most money managers associate with global agriculture -- and it's the stock they lunge at to exploit any shortage in the global food supply.

And that macro trend shows no sign of changing as the world grows ever more crowded -- and its people hungrier [the premise of #board-15787]. "Grain inventories are low worldwide, while demand continues to rise as developing countries get wealthier," says Joe Milano, who runs the T. Rowe Price New America Growth Fund (PRWAX), a major Monsanto shareholder. "The world is not blessed with an unlimited supply of water and arable land, and so farmers need better seed technology to improve crop yield" [see #msg-41324910]. And unlike fertilizer, the market for genetically tweaked seeds still is largely underpenetrated outside the U.S.

China, for instance, has 22% of the world's population but just 7% of its arable land and 8% of its water. China already has to feed 12.5 people per hectare of arable land, compared with just 1.7 in the U.S., and it is rapidly losing farmland to industrialization.

Morgan Stanley's Andrews figures Monsanto's seed business will grow at an 18% pace in the next three years, with new products, increased pricing and a growing market share.

One big concern is that Monsanto has failed to gain U.S. market share in corn and soy while rival DuPont's (DD) Pioneer seed business did [#msg-40779236]. But field trials show Monsanto's top three hybrids producing a higher yield of 10.6 bushels per acre compared with Pioneer's. That edge could help Monsanto in the future. Monsanto is expected to earn $4.40 a share in 2011 after a disappointing $3.29 in 2010 [these numbers refer to the fiscal years ending Aug 31 rather than calendar years—also see #msg-39841050]. That's a future worth investing in.‹

[DewDiligence]

Here they go again…yet another reiteration of LT guidance:

http://finance.yahoo.com/news/Monsanto-Confident-in-prnews-1014333610.html?x=0&.v=1

›Monsanto Confident in Operational Path to 2012 Financial Goals, Reflecting Focus on Delivering Step-Change New Technologies That Emphasize Mix Opportunity

Mix is Key as Genuity™ SmartStax™ and Genuity™ Roundup Ready 2 Yield(R) Supplement Wide-Ranging Options for Farmers; Early-Order Patterns Meeting Expectations

8:00 am EST, Wednesday December 2, 2009

ST. LOUIS, Dec. 2, 2009 /PRNewswire-FirstCall/ -- It's all about the mix, Monsanto Company's (NYSE: MON) Brett Begemann, executive vice president of Seeds & Traits, plans to tell investors at Citi's Basic Materials Symposium in New York today. Key to the company's success will be the mix shift that will be created as farmers choose to upgrade to next-generation technologies, Begemann will say. He'll also discuss Monsanto's 2010 orders to date, which preview this shift and continue to track with the company's expectations for the U.S. business.

In covering the company's operational path through 2012, Begemann will highlight the three key drivers for Monsanto's growth: the launches for its Genuity™ SmartStax™ corn and Genuity™ Roundup Ready 2 Yield® soybean products and trait penetration in Latin America. Successful implementation of these drivers will provide farmers step-changing products to enhance on-farm production and in turn enable Monsanto to reach its commitment of doubling its 2007 gross profit in 2012.

"We've set out ambitious goals, but we can achieve them," Begemann will tell investors. "These products are true game-changers. The benefits they provide - simplicity, protection, higher yields and increased profitability - give our customers a reason to choose to upgrade the products they select for their farms. As we earn farmers' business, we achieve the mix lift that will propel us to our 2012 targets."

Covering the three growth drivers, Begemann will say the company expects an initial commercial opportunity of more than 4 million acres in 2010 for Genuity SmartStax corn. Monsanto expects an unconstrained supply by 2012, which will enable the company to meet market demand a year earlier than originally anticipated. Monsanto also expects a more rapid conversion to the Genuity Roundup Ready 2 Yield soybean platform and recently increased its launch-year expectation for 2010 to 8 million to 10 million acres.

Begemann also will discuss the ascension of the Latin American corn market as Argentina and Brazil gain momentum in the adoption of biotech traits. Both countries have granted breakthrough approvals for core corn traits and are on the front-edge of adoption curves for these traits.

Outlining Monsanto's go-to-market approach for corn, Begemann will explain the variety of means Monsanto employs to reach farmers with its wide-ranging toolkit of corn products. Monsanto offers the industry's most comprehensive package of corn products with reduced refuge double- and triple-stack products in addition to Genuity SmartStax.

"We understand the business of farming and we know each farmer makes decisions differently," Begemann will say. "That's why we have so many choices in our portfolio, to offer products that are right for every farm."

Begemann will highlight the company's cotton and vegetable businesses as well, discussing the penetration of second generation traits and new germplasm classes for cotton in the United States and the potential for breakthroughs in the vegetable business.

A live webcast of Begemann's presentation is available through Monsanto's web site at: http://www.monsanto.com/investors. Following today's live broadcast set for 10:45 a.m. C.T., a replay of the webcast will be available on the Monsanto web site for three weeks. To access presentation slides and the simultaneous audio webcast of the presentation, visitors may need to download Windows Media Player prior to listening to the webcast.‹