Monsanto (NYSE:MON) Needs to Show it Can Grow Corn Seed Share

Even though Monsanto (NYSE:MON) has received a boost recently when field results revealed their SmartStax corn yields were better than competitors after earlier tests were disappointing, that may not be enough of a catalyst to push the company forward, are expectations are they'll have to prove they can grow their share in corn seeds, as they lost some to competitors over the last year.

Now the question they must answer is also if the improved results are worth the premium cost of the seeds, something DuPont (NYSE:DD) has successfully created doubt about in a significant number of farmers, helping them grow share..

Deutsche Bank (NYSE:DB) believes they'll struggle over the next year to do that, and downgraded Monsanto from "Buy" to "Hold."

“We are downgrading Monsanto to Hold as the shares are within 5% of our target and we see few near-term catalysts. While last week’s yield data put to rest lingering doubts over Monsanto’s next generation seeds, with the shares trading at a 70% premium to the S&P 500 we believe upside is limited over the next 3-6 mos. Over the next 6-12 mos, we believe Monsanto needs to grow volume and/or gain share in US corn for the shares to outperform. However, with competitors also targeting share gains in ‘11, we believe this could be a challenge," said Deutsche.

Deutsche Bank analyst David Begleiter added, “The key for Monsanto shares to outperform over the six to twelve months is for Monsanto to translate these advantages into volume growth and share gains in the key U.S. corn seed market."

Last quarter George Soros added a significant number of Monsanto shares to his fund.

Monsanto closed Monday at $60.79, falling $1.36, or 2.19 percent.