S&P Downgrades Swiss Co. Syngenta Inspite of Buyback

S&P Downgraded Swiss Co. Syngenta after yesterday’s 2009 results, in a research note today, 2/9/10. The stock is trading up today at 276.40. The stock trades in Europe.

“Following Syngenta's (SYNN VX, CHF273.30, ***) 2009 results, we reduce our recommendation to Hold from Buy on a heavy 8% y-o-y drop in sales in the crop protection business due to a greater than we anticipated pricing impact on the company's herbicide and fungicide operations.

However, a strong 13% growth in its seeds business protected 2009 EBIT margins at 16.1% - 10bps higher than in 2008; still the group's y-o-y revenues dropped
by 5% to $10,992 mln. We expect free cash flow to remain robust on strong growth in emerging markets and lower raw material costs. Comfortable on its cash positions, Syngenta plans $200 mln share buyback and total cash return of $750 mln in 2010. Management's outlook for 2010 is positive where it sees volume growth from Q2 10. We slightly reduce our equally-blended DCF/multiples-derived 12-month target price to CHF282 (WACC: 7.4%, terminal growth rate: 2%) from CHF284 after reducing our 2010 revenue and EBIT estimates
by 5% and 8% respectively." / Ankit Jain