DOW Agrosciences & Gowan Join Hands - Analyst Blog

Dow AgroSciences LLC, a wholly owned subsidiary of The Dow Chemical Company (DOW) along with Gowan has entered into a new development and marketing license agreement, allowing the later to license the novel active fungicide meptyldinocap.  Based in Arizona, Gowan is the marketer of crop protection products.

As per the agreement, Gowan will develop the fungicide meptyldinocap active for use in fruits and vines in the U.S. and Canada. Further, it will provide growers with a new, unique and highly effective tool for powdery mildew management. However, the financial terms of the agreement were not disclosed.

Meptyldinocap is a novel powdery mildew (Erysiphe necator) fungicide with a "multisite" mode of action. It is the resolved isomer of dinocap with a more favorable toxicological profile. It shows protectant and post-infective activities on various powdery mildew species. Meptyldinocap acts as an uncoupler of oxidative phosphorylation, upsetting the electrochemical balance of the cell while preventing the formation of energy-rich ATP. It will not only be used for the control of powdery mildew in grapevine, but also developed for use on cucurbits and strawberries. Due to its "multisite" mode of action, the resistance risk is judged to be quite low. Therefore, meptyldinocap is considered to be of particular interest as a tool for the management of powdery mildew strains resistant to other fungicides.

Recently, DOW earned 69 cents per share in the third quarter of 2011, ahead of the Zacks Consensus Estimate of 64 cents per share as well as last year’s 45 cents per share. However, including one-time charges, the company earned 62 cents per share compared with 54 cents per share in the year-ago quarter.

Quarterly revenues jumped 17% year over year to $15.1 billion, above the Zacks Consensus Estimate of $14.7 billion, driven by double-digit gains in all operating segments and geographic areas, with the largest growth in Latin America (21%) and Europe, Middle East and Africa (EMEA) (19%). In the emerging geographies, sales reached $5 billion, a new quarterly record for the company.

Dow anticipates demand to improve further, especially in Asia with the global economic recovery. The US and European markets have also started showing signs of improvement. Dow is also optimistic on major consumer-markets, including electronics, coatings, automotive and packaging. However, construction markets are expected to remain weak.

DOW faces stiff competition from EI DuPont de Nemours & Co. (DD).

Currently, DOW has a short-term (1 to 3 months) Zacks #3 Rank (Hold), but a long-term Neutral recommendation.

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