Citi Downgrades Industrias Bachoco (IBA) to Sell

July 29, 2008 9:34 AM EDT

Citi downgrades Industrias Bachoco (NYSE: IBA) from Hold to Sell (with Speculative Risk). Price target lowered from $37 to $30.

Citi analyst says, "Our recommendation is predicated in weak earnings due to a combination of high and volatile raw material costs, consumer caution and a big increase in chicken imports from the U.S., which makes it difficult for the company to pass on costs to end consumers; additionally chicken sales price in Mexico is decreasing. We therefore expect Bachoco's operating results to remain depressed even though the company is Mexico's leading poultry producer. Forward operating multiples are currently high by historical standards and this caps upside potential for the stock."

Industrias Bachoco, S.A.B. de C.V. is a holding company, with no operations other than holding the stock of its subsidiaries. Its main operating subsidiary is Bachoco, S.A. de C.V. (BSACV), which owns the principal operating assets of Industrias Bachoco, S.A. de C.V. The Company has four principal product lines: chicken, table eggs, balanced feed and swine.

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