Although it is a big global player in seeds and crop protection, Switzerland's $16 billion market cap Syngenta (SYT ) gets scant attention on the Street. Still, its American depositary receipts have shot from 20 in mid-August to 28. Thomas Gilbert of UBS (UBS ) in Switzerland (which has done banking for Syngenta) figures the stock has more upside: His price target is 37. He sees Syngenta earning $9.65 a share in 2006 and $11.52 in 2007 (before special charges) vs. $8.46 in 2005. Some 78% of the company's total 2005 sales of $8.1 billion in more than 90 countries comes from herbicides, insecticides, and fungicides, and the rest from seeds. Crop protection is a $35 billion market, says Chief Financial Officer Domenico Scala. Syngenta, he notes, has $700 million in free cash flow, part of which will be used for share buybacks. Scala also says one of the company's new focuses will be in producing ethanol-based biofuels: It filed results of pilot trials with the U.S. Agriculture Dept. last year. Already, a European Union law requires member countries to raise biofuel use to 5.75% of consumption by 2010 from 2% in 2005. Among Syngenta's big rivals are DuPont (DD ), Monsanto (MON ), Dow Chemical (DOW ), and Bayer (BAY ).
Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.
By Gene G. Marcial