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Fly News Breaks for August 13, 2018
BAYRY, SMG
Aug 13, 2018 | 10:14 EDT
SunTrust analyst William Chappell expects shares of Scotts Miracle-Gro (SMG) to trade lower this morning in sympathy with the California jury verdict against Bayer's (BAYRY) Monsanto unit. Scotts has a long-term agreement with Monsanto to market and sell Roundup to consumers at retail in the U.S. and Europe, Chappell tells investors in a research note. He points out that there are over a thousand similar lawsuits against Monsanto in various stages. In the analyst's opinion, there is likely no legal risk to Scotts Miracle-Gro from Friday's jury verdict in California. As part of the master agreement between Scotts and Monsanto signed three years ago, Scotts is indemnified from any litigation relating to the Roundup/glyphosate issue, Chappell points out. Further, the company is not listed as a defendant in any of the cases filed against Monsanto, he adds. Nevertheless, Chappell estimates that Roundup represents roughly 10% of Scotts' EBITDA, and he believes sales could be impacted over the long-term from these trials. The analyst keeps a Buy rating on the shares with a $100 price target.
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