S&W Seed (SANW) – Analysts’ Weekly Ratings Updates

Several brokerages have updated their recommendations and price targets on shares of S&W Seed (NASDAQ: SANW) in the last few weeks:

  • 6/10/2019 – S&W Seed had its “buy” rating reaffirmed by analysts at B. Riley. They now have a $3.50 price target on the stock.
  • 5/30/2019 – S&W Seed was downgraded by analysts at Zacks Investment Research from a “buy” rating to a “hold” rating. According to Zacks, “S&W Seed Company is engaged in breeding, contracting to grow, processing and selling agricultural commodities, which primarily include alfalfa seed and, to a lesser extent, wheat. Alfalfa seed varieties grow in warm climates and can thrive on poor, saline (salty) soils. The Company sells the seed primarily to dealers and distributors who, in turn, sell primarily to hay and dairy farmers who grow hay for dairy cattle and other livestock. S&W Seed Company is headquartered in Five Points, California. “
  • 5/24/2019 – S&W Seed had its “buy” rating reaffirmed by analysts at National Securities. They now have a $6.00 price target on the stock. They wrote, “Legacy Pioneer Agreement Divested. On May 23rd, SANW announced the termination of the Pioneer distribution agreement with parent company Corteva, who subsequently received an exclusive license agreement for production and distribution of varieties that SANW had previously controlled.

     Favorable Terms. SANW receives $45 million immediately, and $25 million for existing inventory over the next 21 months. The Pioneer distribution agreement had contributed $35 to $40 million in revenue over the past few years, but we had previously modeled a drop off to the $25 to $27 million range for fiscal 2020.

     Experienced Management Team with Deep War Chest. We have a high degree of confidence in SANW’s ability to utilize the $70 million inflow prudently via debt reduction and M&A activity. Given the uncertainty regarding timing and scale of acquisitions, we are not including this potential in our model. However, we believe acquisitions announced over the next few quarters will more than offset the revenue lost from the Pioneer agreement and will result in a profitable pro forma model.

     A Transformational Move. We believe SANW has been making productive steps in turning around a company that was too concentrated from a geographic, crop and customer perspective. While several major initiatives have been taken, we believe this agreement represents the most significant event in the company’s history. As such, we believe the turnaround that was already well underway is meaningfully accelerated.”
  • 5/24/2019 – S&W Seed was upgraded by analysts at Zacks Investment Research from a “hold” rating to a “buy” rating. They now have a $2.75 price target on the stock. According to Zacks, “S&W Seed Company is engaged in breeding, contracting to grow, processing and selling agricultural commodities, which primarily include alfalfa seed and, to a lesser extent, wheat. Alfalfa seed varieties grow in warm climates and can thrive on poor, saline (salty) soils. The Company sells the seed primarily to dealers and distributors who, in turn, sell primarily to hay and dairy farmers who grow hay for dairy cattle and other livestock. S&W Seed Company is headquartered in Five Points, California. “
  • 5/23/2019 – S&W Seed was upgraded by analysts at ValuEngine from a “hold” rating to a “buy” rating.
  • 5/10/2019 – S&W Seed had its “buy” rating reaffirmed by analysts at National Securities. They wrote, “ Third Quarter A Healthy Beat. Revenue of $18.2 million beat our estimate of $14.0 million and consensus estimates of $13.3 million. A net loss of $0.10 per share also came in ahead both our estimate of $0.11 per share and consensus estimates of $0.14 per share. A stronger than expected quarter from Pioneer and the legacy Chromatin business drove the positive results.

     Chromatin Acquisition Returns To Profitability Faster Than Expected. Initially expected to be modestly dilutive to EBITDA, management now expects the acquisition to turn a modest profit for fiscal 2019. While not a meaningful profitability driver, this result is notable in our view given Chromatin’s annual EBITDA losses in the $30 million range prior to acquisition.

     Outlook for Fiscal 2020 Enhanced. While there remains headwind from Pioneer looking into 2020, other organic and inorganic growth drivers more than offset this, in our view. We look for low single digit growth despite $10 to $12 million of headwind from Pioneer sales.

     Could the Tide Be Turning? After several years of weak results, SANW has now posted two straight strong quarters, suggesting to us that declining operations may have bottomed out. We believe the past two strong quarters represent the beginning of an extended period of growth driven by stable macro indicators, new high margin varieties turning to commercialization, an improved go to market strategy and inorganic initiatives.”
  • 4/24/2019 – S&W Seed was upgraded by analysts at Zacks Investment Research from a “sell” rating to a “hold” rating. According to Zacks, “S&W Seed Company is engaged in breeding, contracting to grow, processing and selling agricultural commodities, which primarily include alfalfa seed and, to a lesser extent, wheat. Alfalfa seed varieties grow in warm climates and can thrive on poor, saline (salty) soils. The Company sells the seed primarily to dealers and distributors who, in turn, sell primarily to hay and dairy farmers who grow hay for dairy cattle and other livestock. S&W Seed Company is headquartered in Five Points, California. “

Shares of SANW opened at $2.85 on Wednesday. S&W Seed has a 1 year low of $1.81 and a 1 year high of $3.40. The firm has a market cap of $89.35 million, a PE ratio of -12.95 and a beta of 0.47. The company has a debt-to-equity ratio of 0.12, a current ratio of 1.59 and a quick ratio of 0.34.

S&W Seed (NASDAQ:SANW) last announced its quarterly earnings results on Thursday, May 9th. The company reported ($0.10) earnings per share (EPS) for the quarter, beating the consensus estimate of ($0.16) by $0.06. S&W Seed had a negative net margin of 14.26% and a negative return on equity of 9.19%. The company had revenue of $18.18 million during the quarter, compared to the consensus estimate of $13.00 million. On average, analysts anticipate that S&W Seed will post -0.33 earnings per share for the current year.

Several institutional investors and hedge funds have recently made changes to their positions in SANW. Renaissance Technologies LLC acquired a new position in shares of S&W Seed during the first quarter valued at $33,000. Charles Schwab Investment Management Inc. acquired a new position in shares of S&W Seed during the first quarter valued at $45,000. First Manhattan Co. acquired a new position in shares of S&W Seed during the first quarter valued at $182,000. Prescott Group Capital Management L.L.C. acquired a new position in shares of S&W Seed during the fourth quarter valued at $246,000. Finally, Neuberger Berman Group LLC acquired a new position in shares of S&W Seed during the first quarter valued at $266,000. 77.19% of the stock is owned by institutional investors.

S&W Seed Company, an agricultural company, engages in breeding, growing, processing, and selling alfalfa seeds. The company sells its seeds to distributors and dealers in approximately 30 countries worldwide. S&W Seed Company was founded in 1980 and is headquartered in Sacramento, California.

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