UPDATE: Morgan Stanley Opens 60-Day Research Tactical Idea on AGCO
Morgan Stanley has opened a 60-day research tactical idea on AGCO (NYSE: AGCO) believing the company's share price will fall in absolute terms over the next two months.
In the report, Morgan Stanley writes, "AGCO is up 27% since the 12/16 investor day and 12% since 1/5 when Bloomberg reported that AGCO's CEO “doesn't rule out a takeover by another company”. More recently, the USDA reported higher-than-expected global stocks of corn, and corn prices have dropped 9% in two weeks. We remain concerned over competitive share loss and the margin impact from EM expansion, and believe it unlikely that AGCO will be a beneficiary of industry consolidation. Our financial team sees credit tightening by €3 trillion over the next two years across Europe, the region to which AGCO has the highest exposure. AGCO has one of the lowest FCF yields in our group and offers no dividend. We expect an updated outlook with the release in early February and our $4.83 2012 EPS estimate is $0.16 below consensus."
Morgan Stanley maintains its Underweight rating on AGCO, which is currently trading up $0.73 from Friday's $49.62 closing price.
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