Goldman Sachs analysts have retained the buy rating on Monsanto

Last week Monsanto Co. (NYSE: MON) issued a performance update on the performance of its corn and soybean seeds as the 2010 harvest begins and the 2011 planting season comes onto the radar. The results were mixed, with some seed stocks performing well and one, the company’s SmartStax variety, performing no better than Monsanto’s established, cheaper seeds.

SmartStax is a new corn seed with eight genetic changes compared with the less-expensive modified YieldGard VT Triple seed that contains three added genes. The company said that “early indicators suggest some [SmartStax] hybrids are delivering yields on par with YieldGard VT Triple, the industry’s leading triple corn technology, while others have shown yield variability below this YieldGard VT Triple technology.” The company noted that the majority of SmartStax seeds were planted in areas that have yet to be harvested.

That’s probably the best face the company can put on its troubles. SmartStax was not popular with US farmers last spring due to its high price, which forced Monsanto to reduce the amount of seed it sold.

According to an analyst cited in The Wall Street Journal, the initial data on this year’s harvest is “weaker than we expected,” and if similar results continue, the performance of SmartStax would be “disappointing.”

The US corn crop in general is not meeting expectations, according to a commodities broker. He noted that farmers will be “disappointed” because “they paid big bucks, and their yield is worse than last year.”

Monsanto is also failing to make any headway in its efforts to get the European Union to lift its virtually total ban on genetically modified crops.

An analyst at Goldman Sachs has reduced Monsanto’s price target from $71/share to $64/share, still a long way from the company’s share price of $49 at midday today. The Goldman analyst retained the buy rating on Monsanto shares.

As of this writing, Paul Ausick did not own a position in any of the stocks named here.

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