Monsanto shares gained over 6% yesterday after the company reported a 23% rise in Q2 net income on soaring demand for corn-based ethanol. The shares reached $59.66, their highest since the company began trading its shares publicly in 2000, before closing at $57.79. Monsanto posted a Q2 profit of $543 million ($0.98/share) on a 19% increase in revenue to $2.6 billion. Analysts were expecting $0.94 EPS on revenue of $2.44 billion. The company has boosted its full-year 2007 profit forecast to $1.60-1.65/share from $1.50-1.57. Corn prices have soared on forecasts of strong demand from ethanol refineries, which has in turn prompted farmers to sow a greater proportion of their land with corn -- particularly higher-margin "biotech" seed. Monsanto's corn seed sales surged 47% to $1.19 billion from $811 million. Monsanto forecasts its "triple-stack" biotech corn seed will be planted on 16 million acres in the U.S. this year, up from 6 million last year and far outperforming the triple-stack product of rival Dupont. Monsanto's strong biotech corn sales were offset slightly by lower sales of soybean and cotton seed. Corn price futures topped $4.49 a bushel in March, up 66% from September 1.
Sources: Bloomberg, MarketWatch, Mercury News
Commentary: Followup Folder: Monsanto [Briefing.com] • Barron's 2007 Analyst Roundtable, Part 1
Stocks/ETFs to watch: Monsanto Co. (MON). Competitors: DuPont (DD), BASF AG (BF), Syngenta AG (SYT). ETFs: Materials Select Sector SPDR (XLB), Vanguard Materials ETF (VAW), Rydex S&P Equal Weight Materials (RTM), PowerShares FTSE RAFI Basic Materials (PRFM)
Conference call transcript: Monsanto Company Earnings Conference Call Transcript (later today)
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