Seeking Alpha

ADM -1.2% on GrainCorp rejection, but Goldman maintains Buy

  • Archer Daniels Midland (ADM) -1.2% premarket following yesterday's surprise rejection of its purchase of GrainCorp, but Goldman Sachs maintains its Buy rating and eyes any weakness in shares relating to the news as an attractive entry point for investors.
  • The firm believes ADM's statement that it is "reviewing capital allocations, including shareholder distribution alternatives," signals a willingness to redeploy a portion and perhaps all capital targeted for the GrainCorp acquisition towards share repurchases.
  • Goldman sees an improving ag macro environment following a record U.S. corn harvest driving a sharp inflection in ADM's 2014 margins, earnings, and return on invested capital in 2014.
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