Deutsche Bank: Monsanto Is In A 'Stormy Sea,' But Doing Well

In a report published Wednesday, Deutsche Bank analysts maintained a Buy rating on

, with a price target of $132. The company announced its FQ2 EPS at $2.90, representing a 43 percent y/y decline and missing a $0.04 consensus miss. The shortfall was on account of lower-than-expected results in Soybeans, which generated a gross profit of $608 million, as compared to consensus of $638 million. This miss was partially offset by stronger-than-expected results in Ag Productivity, which generated a gross profit of $362 million versus consensus of $348 million. Although Monsanto reiterated its 2015 guidance of $5.75-$6.00, which represents 10-15 percent y/y growth, the analysts expect the company's EPS to be at the "low-end of the range owing to larger FX headwinds." Monsanto has delivered a quarterly EPS miss, albeit a marginal one, and has reduced its full year EPS guidance. Despite this, the analysts said they were "encouraged" by the company's FQ2 release. Monsanto is facing a tough Ag environment, with low commodity prices and lower corn acres, as well as currency headwinds. However, "what Monsanto can control it is controlling and doing so at exceptionally high levels," the analysts mentioned. This includes a healthy flow of new products, cost controls as reflected by opex down by 3-5 percent and "aggressive use of its unlevered balance sheet for share buybacks." The EPS estimates for 2015 and 2016 have been reduced from $5.85 to $5.75 and from $6.85 to $6.65, respectively.