Chris Shaw of Monness Crespi Hardt downgraded Monsanto Company (NYSE: MON) on Tuesday to Neutral from Buy with a price target lowered to $127 from a previous $140.
"We are downgrading Monsanto from Buy to Neutral, due to the findings from our seventh Annual Seed Dealer Survey, which came back the most negative for the seed industry in the history of the survey," Shaw wrote. The analyst adds that the more than 50 dealers that responded to the survey are experiencing some of the most challenging conditions for the industry over the past seven years.
Shaw states that dealers reported that they are seeing greater discounting, reduced trait purchases, reduced spending on seeds while competing against non-major seed brands who are gaining share.
The analyst also notes that according to the survey, farmers are cutting spending for seed, fertilizer and precision agriculture this year, despite the "conventional wisdom" that seed would be the last place farmers would cut.
"The unprecedented results of this year's survey has led us to be more cautious on Monsanto's outlook for the current seed selling season," Shaw wrote.
As a result, Shaw lowered his 2015 EPS estimate to $5.80 from a previous $5.90.
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