UBS analysts have raised their target on Syngenta stock to SFr320, and made it one of their "key calls", citing the prospect of a share buyback and dissipating gloom over Europe's wheat sector.

UBS said it was restating "with good conviction" its "buy" recommendation on shares in the Swiss herbicides and seeds business, which have eased since hitting a 16-month high of E294 at the end of last month.

However, while the note initially fostered a 2.2% rise in the shares, they closed down 1.0% atSFr282.90 amid a widespread weakening of stock markets after disappointing results from US metals giant Alcoa, and further signs of monetary tightening by China.

Furthermore, the investment bank said its case rested in part on "marginally bullish" data for corn prices in Tuesday's monthly US report on global crop supply and demand report.

In fact, the USDA unexpectedly raised its estimate for American corn production in 2009-10, sending prices of the grain down by the exchange limit in Chicago.

Farm pessimism 

UBS, raising its estimate for Syngenta earnings per share in 2010-13, said it "firmly" expected the group to resume share buybacks after Dow Chemical removed the for sale sign from its agriculture division, for which Syngenta had appeared a likely bidder.

The group spent about $2bn buying its shares between 2004 and 2008.

Furthermore, European cereal farmers, who Syngenta relies on for about 30% of revenues in crop protection products, may be more willing to fork out, following some recovery in crop prices.

The 2009 harvest also proved to be "not a catastrophe", following the rain-plagued 2008 campaign.

"This well help at least in partially mitigating grower scepticism and increase farmers' willingness to reinvest proceeds into this [2010-11] crop," UBS said.

Defensive qualities

Meanwhile, in seeds, Syngenta looked in a good position to guide to higher margins, thanks to improvements in its important vegetable business and progress in corn in Brazil.

And Syngenta may prove attractive to investors seeking to shift to defensive investments, given the rapid recovery shares have already achieved since March.

"Strategists believe risk appetite is moderating which should favour a stock with less operational gearing to industrial recovery - such as Syngenta," UBS said.