Same here. I rebought the shares I sold a few day at higher prices. The stock is pretty volatile and generally seems to be the “ ugly duckling” from the 3 spin-off stocks.
A few things:
Some articles mention AG comps, but none of them have a significant seed business.Seeds are key technology and more and more will take over functionality from insecticides etc, as seed traits get developed, that make these obsolete (due to making the plants inspect tolerant. the only other companies that have seed tech are Bayer (owns Monsanto, has issues, but interesting in their own right) and Syngenta (acquired for $40B by the Chinese despite having a smaller seed business than CTVA).
I believe earnings could materially increase over the next couple of years. estimate for this year are $2.3B In EBITDA ( CTVA EV ~9x EBITDA), but I expect them to miss this, due to the wet spring and flooding causing delays and reduction with planting. However, CTVA has existing cost cutting potential of $500M from yet to be realized merger synergies and in the long run, I expect the royalties (mostly for roundup ready seed traits from Monsanto) of $800M to materially reduce, once the patents expire in 2023. So, in the next couple of years, there is an opportunity to add $1.3B in earnings in addition to organic growth for CTVA. |
