Numerous Firms Downgrade Food Processing Stocks as Rising Feed Costs Will Weigh (SFD) (TSN) (ADM) (HRL)

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Stocks in the Food Processing sector are under pressure once again as a recent USDA crop report which signaled prices for corn and soybean will rise continues to weigh. Underscoring the implications of the data Thursday, a number of sell-side firms downgraded stocks in the group earlier.

BofA downgraded Smithfield Foods (NYSE: SFD) and Tyson (NYSE: TSN) to Underperform, citing soft margins and rising prices which will ultimately lift feed costs. The firm said it expects more risks to the downside even amid a 10 percent decline in the sector's stocks over just the last two weeks.

Morgan Stanley, meanwhile, downgraded Tyson and Archer Daniels Midland (NYSE: ADM) to Equalweight. Crop harvests could come in even worse than already anticipated, Morgan Stanley said, and push "normalized" earnings power out further than the Street is expecting.

Elsewhere, Janney downgraded Hormel Foods (NYSE: HRL) to Sell.

Around the Food Processing sector Thursday afternoon:

• Tyson shares down 4.5 percent
  
• Smithfield down 3.6 percent
  
• Archer Daniels Midland down 1.2 percent
  
• Hormel down 1.4 percent

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