Piper Jaffray Reiterates Overweight on S&W Seed Company Following SGI Acquisition Announcement

In a report published Monday, Piper Jaffray analyst Michael E. Cox reiterated an Overweight rating and $17.00 price target on S&W Seed Company

. In the report, Cox noted, “We are reiterating our Overweight rating on SANW shares after yesterday's announcement that S&W intends to acquire Australia's largest non-dormant alfalfa seed producer, Seed Genetics International (SGI). The proposed acquisition accomplishes two major objectives – it nearly doubles S&W's non-dormant seed production and it smooths the seasonality of the business by providing southern hemisphere production. With the transaction set at ~$16 million (including just $5 million in cash up front), we believe it is attractively valued at ~0.7x NTM revenue. Also of importance, SGI expands S&W's sales channels into South America and Africa, and provides new proprietary germplasm (which affords SGI an EBITDA margin of ~10%). For these reasons, we view this acquisition as transformative to the S&W story and recommend the shares on this news.” S&W Seed Company closed on Friday at $10.66.