Psagot Ofek Investment House analyst Limor Gruber has reiterated her “Outperform” recommendation for Makhteshim Agan Industries Ltd. (TASE: MAIN) with a target price of NIS 37, following the publication of a strong financial report for the third quarter by the company’s rival Syngenta International AG (NYSE:SYT; SWX:SYNN). Makhteshim Agan will announce its own financial report on November 7. It share opened at NIS 34 today.
Syngenta posted $1.7 billion in third quarter revenue, beating the analysts’ consensus of $1.57 billion. The company’s crop protection sales rose 16% compared with the corresponding quarter of 2006, after taking currency fluctuations into account. Given that Makhteshim Agan usually reports higher growth rates than its competitors, Syngenta’s growth is a very encouraging sign for Makhteshim Agan’s third quarter results.
Psagot Ofek believes that predicts that Makhteshim Agan will post 16% growth for the third quarter, but Syngenta’s results suggest that the Israeli company might beat this forecast.
Syngenta reported that third quarter crop protection sales in North America were up 11%, compared with the corresponding quarter of 2006, after negligible growth during the first half of the year. Most of the growth came from increased herbicide sales in the US.
Psagot Ofek says that Syngenta’s North American sales growth is another encouraging sign for Makhteshim Agan. It adds that Syngenta has raised its 2007 growth forecast from the “mid-teens” to the “high-teens”. It concludes that the growth trend in the agrochemicals market continues to surprise every quarter. Consequently, Makhteshim Agan’s third quarter financial report will probably be very strong at the sales level, although its gross profit margins will continue to narrow because of a sharp drop in prices in the fourth quarter of 2006 and changes in the company’s product mix.
Published by Globes [online], Israel business news - www.globes.co.il - on October 18, 2007
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