OT: ...the obfuscating language MON uses in its PR’s...
A friend who owned a PR business had one staffer whose main field of expertise was turning bad news into good: "Titanic's second voyage on hold" sort of thing.
[The consensus opinion is that the recent selloff was overdone and that SmartStax biotechnology is not deficient in any way. Still, I think MON botched this issue with the investment community by not being more transparent about exactly what it was reporting in its most recent PR (#msg-54918417).
As is discussed cursorily in this Bloomberg piece, the business impetus for SmartStax is not increased yield per se, but rather increased yield after taking into account the regulatory requirement for an insect refuge. Also part of the business impetus is the added convenience of “Refuge in a Bag,” a product that is not yet on the market but will be soon.]
Monsanto Co.’s SmartStax corn, a new seed with eight genetic changes, probably won’t yield more than a less-expensive technology that has three added genes, Goldman Sachs Group Inc. analysts said.
Monsanto still will increase its corn-seed sales because the new technology provides a yield benefit by allowing farmers to plant less conventional corn[i.e. a smaller insect refuge], Goldman Sachs analysts led by Robert Koort said today in a report. Regulators require conventional corn to be planted near insect-killing corn to prevent bugs from developing resistance to insecticides.
“We no longer expect SmartStax to out-yield its robust triple stacks,” Houston-based Koort said in the report. “Yield parity is the new target.”[MON itself disagrees, as can be seen in the bottomost paragraph of this post.] Koort reduced the share-price target for the world’s largest seed producer to $64 from $71.
Chief Executive Officer Hugh Grant is counting on SmartStax, billed in December as “the highest yielding corn product available,” to halt DuPont Co.’s recent market-share gains and help boost annual profit 13 percent to 17 percent after earnings from Roundup herbicide collapsed.
Monsanto shares have tumbled 14 percent since the St. Louis-based company said on Sept. 20 that early harvest data showed some SmartStax corn hybrids were missing yield projections.[However, most of the sell-off occurred this week because some investors did not understand what MON was saying in its 9/20/10 PR: #msg-54918417.]
Jefferies Report
SmartStax corn yields in Iowa are so far trailing so-called triple stacks by 3 percent to 5 percent, Laurence Alexander, an analyst at Jefferies & Co., said yesterday. Koort said the gap may narrow as the harvest extends north into regions with more insect infestation.[This is an important point—the enhanced insect control in SmartStax relative to the older triple stack doesn’t do any good on plots where there is little or no insect stress in a given growing season.]
“While the early harvest data is disappointing, we believe developments are not as poor as implied” by the stock’s performance, Koort said in the report. Goldman maintained its 2011 earnings estimate of $2.87 a share[for the fiscal year ending 8/31/11] and its “neutral” rating on the shares.
Deutsche Bank AG analysts led by David Begleiter said in a report today that the share decline is “overdone.” They said the yield underperformance is correctable because it was caused by one specific variety of seed, known as DeKalb 61-21, not the SmartStax technology that was applied to that seed.
The Deutsche Bank analysts cut their 2011 earnings estimate by 10 cents a share to $2.80 to reflect costs that Monsanto may incur under its SmartStax satisfaction guarantee. They lowered their share-price target by $5 to $65 and maintained their “buy” rating.
Monsanto Policy
Monsanto will provide credits for future seed purchases to farmers who are dissatisfied with SmartStax corn seed, Kelli Powers, a company spokeswoman, said yesterday.
SmartStax...is still expected to yield 5 percent to 10 percent more than triple stacks when all the data is collected, Powers said. Better genetics, insect resistance and the requirement for a smaller refuge of conventional corn will improve yields, she said.‹
Market Data 
Markets 
AI
