Bank of America Merrill Lynch upgraded FMC Corporation (FMC) two notches, to Outperform, its equivalent of a buy rating, from Underperform, its equivalent of a sell rating. The firm says that the risk facing the company from the increased use of genetically modified organisms, or GMOs, in soybeans has declined, while the company should benefit from its acquisition of assets from DuPont (DD).

GMO RISK, DUPONT DEAL: Bank of America analyst Steve Byrne said that he had previously believed that the increased use of GMOs in soybeans, along with farmers' "weak income," would cause FMC's agricultural sales to drop. However, Byrne says that his firm's survey indicates that this risk has significantly declined. FMC's agricultural sales will probably rise 1%-3% if the use of a competing product, dicamba, is restricted, Byrne believes. Meanwhile, Byrne wrote that FMC's acquisition of a portion of DuPont's crop protection business diversifies FMC's earnings and the unit's earnings before interest, taxes, depreciation and amortization could reach $600M next year versus the company's guidance of $535M.

ESTIMATES, TARGET: FMC can beat consensus 2018 and 2019 estimates by 10%-15%, the analyst stated. He hiked his price target on the shares to a Street high $103 from $65.

WHAT'S NOTABLE: On August 4, Japanese bank Nomura upgraded FMC to Buy from Neutral. Analyst Aleksey Yefremov contended that a bottom for the agricultural cycle had become more visible, as the risk of crop prices and demand for crop protection was "skewed to the upside." The analyst added that the company's synergies from the DuPont deal could "ultimately" exceed its first year guidance by 50%-100%, while the EBIT view for its lithium unit "appears conservative." The analyst raised his price target on the stock to $97 from $78.

PRICE ACTION: In morning trading, FMC rose nearly 2% to about $86 per share.