A Loose Defense of Monsanto (MON, MOO)

Monsanto Company (NYSE: MON) is down and out as a stock.  At $48.50, its 52-week trading range is $44.61 to $87.06.  This was also a $120 stock as recently as 2008. There is at least one firm that believes enough is enough.  There is no lack of other calls that refute the defense.

Deutsche Bank believes that concerns over Monsanto’s SmartStax corn are being overstated.  Early indications have suggested that SmartStax is underperforming against legacy products, but Deutsche Bank data shows that this appears to be due to existing hereditary traits (germplasm) rather than the biotech traits of SmartStax.  The data suggests  germplasm did not respond well to severe heat, and that is able to be corrected.

There is are conflicting views here.  Goldman Sachs argues that SmartStax will no longer outyield Monsanto’s triple-stack corn, and Goldman Sachs cut the price target to $64 from $71 on this concern.  Another competing take was given yesterday.  Jim Cramer called Monsanto “The Worst Stock of 2010.”  He is not yet interested in jumping in.

Despite Deutsche Bank maintaining a buy rating, Monsanto shares are still slightly in negative territory for the day.  Shares were just above $55.00 on Monday.   It seems that the problems at hand are not going to just magically get priced into the shares overnight.

Monsanto is one of the highest weightings in the Market Vectors Agribusiness ETF (NYSE: MOO), and that could weigh on the ETF despite the ongoing potash merger adding a boost to shares.  The MOO shares are down 0.2% at $47.00 today, and the 52-week range is $35.56 to $47.90.

JON C. OGG