The science-based products and services company is set for a record year, thanks to increased seeds business.
E.I. du Pont de Nemours, or DuPont ( DD), is one of the company’s most profitable while being the least cyclical and requiring the lowest amount of capital, according to Soleil analyst Mark Gulley. With earnings growth of 15% annually and its percentage of total earnings projected to be in the 40% to 45% range in 2011, Gulley wouldn’t be surprised if the company elected to divest underperforming businesses to further concentrate on seeds where it competes with Monsanto ( MON) and Syngenta ( SYT).
DuPont takes a different approach to the business than Monsanto, which Gulley sees as the company’s toughest competition. Pioneer’s "right seed for the right acre" approach encourages farmers to cater purchases to specific crop needs while Monsanto appeals to "profit-maximizing" farmers who are willing to pay more for seeds that protect against a variety of stresses.
Uncertainties regarding regulations and pricing remain risks to seed companies. Lower farm incomes in 2009 will make farmers unlikely to stomach higher seed prices. While prices on existing hybrids will likely remain unchanged, Pioneer said mix effect should lift the average selling price for corn by 5% and soy as much as 3%.
At a recent investor conference, Pioneer presented its goals to grow sales 50% and double earnings for the period from 2008 to 2013. "While we appreciate DuPont’s aggressive goals through 2013, it will be difficult to keep up with the pace set by Monsanto," Gulley said.
<
Seeds Of Change For DuPont – Forbes.com