- Merrill Lynch notes that Monsanto's (NYSE:MON) biotech pipeline has a good balance of near- and long-term opportunities that are highlighted by the company's top-ten list. Based on progress made during 2006 field trials, which Monsanto briefly commented on at a recent investor conference in London, the firm estimates that many of these top-ten products will advance to the next phase of commercial development when Monsanto provides its R&D update during the F1Q conference call in early-January. Firm expects pipeline advances to drive an increase in Monsanto's gross margins to 54% by 2010 versus 49% in F2006 and the company's 51-53% target.
They also expect Monsanto to confirm in January that several new biotech products advanced to phase I evaluations in 2006, similar to the five new entries announced last January. ML's DCF-derived price objective for Monsanto has more than doubled from $22.50 (proforma stock split) to $55 in the last two years, driven by the expansion in seeds and biotech traits. They could see an upward revision to their DCF analysis, post the R&D update in January, similar to the $5/sh increase after the last revision, owing to increased breadth and advancement of the biotech pipeline.
Notablecalls: Tight leash on this one. While I think it has potential for a 1 pt move, I aknowledge it may also start quickly rolling in the opposite direction as it has done many times before.
They also expect Monsanto to confirm in January that several new biotech products advanced to phase I evaluations in 2006, similar to the five new entries announced last January. ML's DCF-derived price objective for Monsanto has more than doubled from $22.50 (proforma stock split) to $55 in the last two years, driven by the expansion in seeds and biotech traits. They could see an upward revision to their DCF analysis, post the R&D update in January, similar to the $5/sh increase after the last revision, owing to increased breadth and advancement of the biotech pipeline.
Notablecalls: Tight leash on this one. While I think it has potential for a 1 pt move, I aknowledge it may also start quickly rolling in the opposite direction as it has done many times before.
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