Archer-Daniels-Midland (ADM) and Bunge Global (BG) are expected to benefit in 2026 from stronger-than-anticipated US biofuel blending mandates and improved soybean crush margins, Morgan Stanley said Tuesday in a report.
While the Q3 performance is shaping up to be weaker than expected, the market has shifted focus to a stronger Q4 and anticipated momentum for 2026, Morgan Stanley said.
Favorable federal clean fuel targets, known as Renewable Volume Obligations, and a 2026 crush margin curve that has gained 20% since Q1 underpin revised estimates for Q4 and 2026, the report said.
"We admittedly underestimated the velocity at which the RVO would improve both margins and equity market sentiment, and, while we are now crediting our valuation for this improved near-term environment, we remain equal-weight as we still have several supply-related concerns," the report said.
Morgan Stanley raised its 2026 earnings estimates for Archer-Daniels-Midland to $4.50 a share from $4.25 and its 2027 forecast to $4.70 from $4.40. For Bunge, 2026 EPS is projected at $8.75, up from $8.15, and 2027 at $9.35, up from $8.65.
Morgan Stanley boosted its price target for Archer-Daniels-Midland stock to $57 from $47, and for Bunge to $83 from $74.
Archer-Daniels-Midland shares rose 2% in Tuesday trading, and Bunge gained 3.1%.
Price: 59.45, Change: +1.17, Percent Change: +2.01
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