Stifel Bullish On Monsanto Company

Analysts at Stifel upgraded shares of Monsanto Company MON to Buy from Hold and established a price target of $135 Thursday.

Paul Massoud cited “seasonal trends, favorable valuation, and overdone negative sentiment imply upside for MON shares.”

Key points include:

• Monsanto’s end of year stock performance beginning in September has consistently provided gains into the new year.
• Massoud finds historically, Monsanto shares have traded in a EV/EBITDA range of 11-13 times. With analyst 2015 EBITDA estimates of $5.2B, Monsanto shares reflect a 11.8 times multiple. Assuming the high end of this historical range, a 13 times multiple would imply a stock price of $125 (+9.9%).
• Seeds are the most important factor to maximize a farmers yield. Analysts find,”Given the goal of increasing yields, farmers will likely shift resources to ensure that the best seed is planted, implying that Monsanto should still see price increases as a result of product mix uplift even in a weaker crop price environment.”

Shares of Monsanto recently traded at $114.68 up 0.87 percent.