UPDATE: Piper Jaffray Reduces PT to $92 on Monsanto on Pipeline Valuation
Piper Jaffray reiterates its Overweight rating on Monsanto (NYSE: MON) but reduces its price target on shares from $97 to $92 on compassed valuation multiples.
Piper Jaffray comments, "As valuation multiples have compressed in the agriculture sector (as well as large cap biotech – a commonly used peer group for MON shares), scrutiny around the sustainability of MON's premium multiple has intensified. In this note, we revisit our Overweight thesis on MON shares and outline how Monsanto is positioned to deliver at least mid-teens annual earnings growth over the next 3 years, which should be supportive of sustained P/E valuations. Latin America will continue to be a key profit growth driver over the next 2 years - a factor that we believe investors under-estimate. Following a review of Monsanto's R&D pipeline, we provide a framework to value this pipeline – which we believe is worth approximately $13 per share."
MON closed at $71.30 on Tuesday.
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