Analyst Note| Seth Goldstein, CFA |
Bunge reported solid second-quarter results. Adjusted core segment EBIT was slightly down as lower agribusiness processing profits were nearly offset by strong growth in the rest of the business. The lower grain processing profits were in line with our previous outlook for the year. However, we've updated our model to incorporate stronger merchandising and refined and specialty oils results as well as the impact of our higher assumed U.S. corporate tax rate. Having updated our model to reflect these changes, we raise our Bunge fair value estimate to $74 per share from $72. Our no-moat rating is unchanged. At current prices, we view Bunge shares as fairly valued with the stock trading just above our fair value estimate and firmly in 3-star territory.