Monsanto & Second Genome Ink Multi-Year Research Deal

Monsanto Company (NYSE:MON) is set to boost its innovation-based growth trajectory with a new multi-year research agreement inked with the California-based microbiome science company, Second Genome, Inc. The deal entails the discovery of unique microbiome-based solutions that would assist farmers in tackling environmental challenges in farms. Financial details of the treaty have not been disclosed.

Per the agreement, both the companies would jointly conduct extensive research for developing premium next-generation insect-control solutions. Second Genome would utilize its rare bioinformatics platform for predicting and evaluating the utility of certain valuable proteins derived from the microbiome for agricultural practices.

Moving Forward

Monsanto has been braving quite a few industry-specific headwinds with its bold moves associated to cost savings, increased innovation and greater financial discipline. This Zacks Rank #3 (Hold) stock believes that the agreement with Second Genome would fortify its presence in the domain of insect-controlling agricultural research. The deal would expand Monsanto’s commercial prospects via discovery of new insect-controlling products in the near term.

Such strategic attempts are likely to boost Monsanto’s financials in the quarters ahead. By not yet accepting Bayer (DE:BAYGN) AG’s buyout offer, the company has also affirmed that its brand is currently a prominent partner choice in the industry.

However, we observe that headwinds such as economic slowdown in booming nations like China, cyclical downturn of agricultural industry, low prices of agro products, strengthening U.S. dollar, devaluating Argentinean Peso and extensive industry rivalry might limit Monsanto’s growth.

Share price of Monsanto was $106.07 per share as of Sep 6, 2016, rising 2.5% since the release of its third-quarter fiscal 2016 figures in Jun 29. We expect the latest research agreement news to enhance investors’ confidence in the stock.

Stocks to Consider

Better-ranked stocks within the industry include Cosan Limited (NYSE:CZZ) , First Majestic Silver Corp. (NYSE:AG) and Coeur Mining, Inc. (NYSE:CDE) . All the companies presently hold a Zacks Rank #2 (Buy).

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>