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Goldman Sachs has come out positive on two companies that overlap in agriculture and fertilizer plays this morning, and it has raised estimates and targets:

• The firm recently visited Monsanto (NYSE: MON) and it notes that the recent pullback gives an attractive buying opportunity.  The company is the beneficiary of market share gains for both Dekalb and ASI brands, and its triple-stack is still a must for corn farmers. It also noted sharp increases in Roundup prices.  Goldman Sachs noted a significant boost for 2008 earnings.  It raised estimates by $0.10 to $2.95 for 2008 and raised 2009 estimates by $0.05 to $3.65 EPS.
• It also has a call on The Mosaic Co. with fertilizer fundamentals to remain tight in the medium term.  It noted that farmers are more concerned with maximizing yield rather than cost control issues.  With phosphate prices in upward trend, Goldman Sachs is also hiking targets: raised 2008 EPS by $0.19 to $3.90; raised 2009 EPS by $1.30 to $7.30; raised 2010 EPS by $0.80 to $7.45.  The firm has also lifted its price target on Mosaic to $135 from $120.

On a macro call, Goldman Sachs actually sees corn plantings declining any acreage increasing, with a rapid adoption of biotech traits.  If one person has been behind anything related to agriculture, it is Jim Cramer and you can see his new agriculture pick for $16 corn/wheat or you can see his top five picks for the agriculture group here.

We still note that if you want to pursue the whole agriculture theme but do not want to have the risks associated with picking one stock and taking any company execution risk versus the sector, you can look at the Market Vectors Global Agribusiness ETF (AMEX:MOO).

Jon C. Ogg
March 6, 2008