27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
- The share price of Monsanto Company (NYSE: MON) has declined more than 28 percent year-to-date, hitting a low of $83.11 on September 28.
- Morgan Stanley’s Vincent Andrews has maintained an Overweight rating on the company, with a price target of $120.
- Andrews expects the company to post its F4Q EPS and F2016 guidance below the consensus and mentioned that execution on costs and the balance sheet would be needed for the stock to fare better.
Although the F4Q results are not expected to be “great,” Andrews believes that they would not be as bad as implied by the F3Q results. The ongoing earnings multiple derating on Monsanto appears to imply that there are several investor concerns.
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One of the concerns is related to whether pricing would be significantly negative for the company in F2016. According to the Morgan Stanley report, “While the current environment remains challenging, we note that this has been an unfounded concern for the past two challenging fiscal years.”
Investors have also been concerned about the failed bid from Syngenta AG (ADR) (NYSE: SYT). While some investors view this as a sign that the concerns regarding pricing pressure are true, others believe that this was Monsanto’s way to protect its patent portfolio from taxes.
In addition, the declining in glyphosate prices have also led to some concerns with some “vocal bears” expecting a decline in the segment’s gross profit by close to 50 percent. There have also been FX headwinds that are expected to impact the F2016 EPS by about $0.40.
In addition, investors have voiced concerns regarding speculations that “the company is going to throw more money at precision agriculture,” which many already view as a failed initiative.
Andrews believes that Monsanto’s shares are relatively cheaper than those of its peers, given that “i) Monsanto's consistently under-leveraged balance sheet; and ii) Monsanto's reliance on immediately expensed R&D rather than amortized capex to drive growth, which understates Monsanto's current earnings power relative to the more capex oriented broader equity market.”
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.