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Inside Wall Street


Syngenta's Green Shoots

Huge worldwide demand for food and a robust new-product pipeline have sparked fresh growth at Syngenta (SYT), a global leader in crop protection and seed production. The Swiss company's stock hit a 52-week high of 54.86 (per American depositary receipt) on Dec. 1. With the strong moves in the grain markets, the price and volume outlook for next season is brighter, notes Andrew Stolt of Bank of America Merrill Lynch (BAC), who rates Syngenta a buy. He also sees margins on seeds rising as more products are launched. (Merrill did business with Syngenta).

Syngenta's two new crop-protection products, Cruiser and Amistar, should boost yearly sales by $1 billion, according to CEO Michael Mack. Cruiser protects corn and soybean seeds from insects and also promotes healthier growth. Amistar is a fungicide widely used to derive higher yields, says Mack. The two are in such demand that Syngenta has tripled the output of Cruiser and doubled that of Amistar.

Brazil, the world's third-largest corn producer, recently approved use of a Syngenta feature to help stymie corn borers. Thomas Gilbert of UBS (UBS) says the "high-margin vegetable seed business is growing fast, and Brazilian corn is emerging as a further strength." He sees profits of $3.19 per ADR in 2009, $3.65 in 2010, and $4.01 in 2011, vs. 2008's $3.20.

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.

Probing Genes at Top Speed

A key part of drug discovery is studying so-called gene expression—or the way genes get switched on or off. WaferGen Biosystems (WGBS) believes it has an edge over rivals with its new system for predicting gene expression that can screen the genome at 10 to 60 times faster than competing systems, and for less money.

WaferGen's SmartChip Real-Time PCR System, to be launched in 2010's first quarter, should generate sales of $5 million to $8 million in 2010 and $15 million to $20 million in 2011, figures William Collins, CEO of hedge fund Brencourt Advisors, which owns shares. Drugmakers, medical labs, and university researchers are the main potential customers, he notes. And the market exceeds $3 billion. Elemer Piros of Rodman & Renshaw Capital Group (RODM) rates WaferGen outperform, with a 12-month target of 7 for the stock, now at 1.65 a share.

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.

The Momentum at CSX

Widespread signals that an economic recovery is in place, plus Warren Buffett's purchase of Burlington Northern Santa Fe (BNI) on Nov. 3, have buoyed other rail stocks. Carl Birkelbach, president of Birkelbach Investment Securities, says CSX (CSX) is the most attractive of the lot as it should gain immensely from the coming recovery. Its stock climbed to a 52-week high of 50.15 a share on Nov. 17, up from 20 on Mar. 9. With the stock now at 48.82, Birkelbach says there's at least a further 30% upside potential in the next 6 to 12 months.

George Pickral of investment firm Stephens rates the stock overweight, with a target of 59. "CSX can continue to grow earnings in any environment because of its pricing power and market-share gains," he says. Prices are still depressed at 50% below historical levels, Pickral says. He sees CSX earning $2.85 a share in 2009 and $3.20 in 2010.

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.


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