Buy Monsanto (MON) Given the Large Arb Spread - BMO
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BMO Capital analyst Joel Jackson is recommending investors buy Monsanto (NYSE: MON) given large merger spread/
Jackson commented, "F2017/18E (Aug) estimates lower ~5% following MON's FQ4 release. Though handicapping the Bayer/MON regulatory process remains complicated, we continue to see the asymmetrically positive risk/reward as compelling. The EU could rule on ChemChina/Syngenta in late October with an approval likely narrowing the currently wide 24% discount to MON's $128 takeout price. On a standalone basis, MON could have upside from current levels ($105-110/sh) assuming an ~18x ~$5.50-6.00 mid-term EPS run-rate plus the $2 billion reverse break fee. We continue to rate MON Outperform with a $128 target price."
The firm maintained an Outperform rating and price target of $128 on MON.
Shares of Monsanto closed at $103.18 yesterday.
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