Monsanto's Growing Troubles

This week, Monsanto CEO Hugh Grant confidently reiterated 2007 guidance at the upper end of $1.50-$1.57. Grant credited seed and traits subsidiaries Asgrow and DeKalb's market share gains against rival Dupont in 2006, strong gross profit margin growth (from 48% in 2006 to 51%-53% by 2010), and plentiful pipeline products. Then Tuesday, a federal judge ruled that the U.S. Environmental Agency had been "cavalier" in waiving a full environmental impact study before allowing Monsanto to plant genetically engineered alfalfa seeds. The seeds spread, endangering the non-modified alfalfa species and thereby the livelihood of organic and anti-modified crop farmers and exporters to Europe and Japan. Though not named in the suit, the plaintiffs may seek an injunction against Monsanto's modified alfalfa seed sales based on the ruling. Monsanto is also under scrutiny in Britain for chemical land and water contamination at its dumping sites. Shares of Monsanto were trading yesterday at $54.28, up 1%.

Sources: New York Times, Market Watch, Corp Watch, MSN Money, Reuters, St. Louis Post Dispatch
Commentary: Monsanto 10-K: Execs Will Pay If They Cook the Books • DuPont Cuts Jobs to Invest in Seeds Business • Monsanto F4Q06 Earnings Call Transcript
Stocks/ETFs to watch: Monsanto Co. (MON), E.I. DuPont de Nemours (DD). Competitors: American Pacific Corp (APFC), Syngenta (SYG)

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Comments

[jbs:]

What you call "Monsanto's Growing Troubles" are legal battles. Monsanto has been involved in similiar legal battles since its inception. None of the things you mention are new or suprising or are significant enough to warrant a revalution of Monsanto.

If your point is that Monsanto's legal problems are increasing (and I'm not convinced they are growing any faster than the company as a whole) then please state that as your position.

2007 Feb 14 08:59 AM