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KeyBanc Maintains a 'Buy' on Hormel Foods (HRL); Adjusts Estimates & PT

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November 25, 2009 9:34 AM EST

KeyBanc maintains a 'Buy' on Hormel Foods (NYSE: HRL), raises price target from $39 to $42.

KeyBanc analyst says, "We are maintaining our BUY rating and increasing our price target on Hormelshares to $42 as we expect the valuation gap between HRL and its large-cap packaged food peers to narrow. HRL posted 4Q09 results that were roughly in line with our high-on-the-Street estimates and well ahead of consensus estimates, and gave FY10 guidance that suggests ~9% EBIT growth at the segment level. HRL's EPS growth in FY10 will be limited by non-operating items including a lower contribution from its rabbi trust and higher pension expense. However, we believe the key issue for investors to focus on is segment EBIT growth, and we expect it to accelerate in FY10 (8.7% growth, compared to 6.6% growth in FY09)...Our FY10 EPS estimate is $2.68, in the middle of the Company's guidance range and $0.07 higher than our previous estimate."

To see all the upgrades/downgrades on shares of HRL, visit our Analyst Ratings page.

Hormel Foods Corporation, together with its subsidiaries, engages in the production and marketing of various meat and food products in the United States and internationally.