Archer Daniels Midland (ADM) Beat Bodes Well for 2020, Baird Reiterates Outperform

Baird analyst Ben Kallo reiterated an Outperform rating and $48.00 price target on Archer Daniels Midland (NYSE: ADM) after Q4 results significantly exceeded consensus expectations on the bottom line driven by a $0.61/share benefit from the retroactive application of the BTC. Financial results highlighted several long-term growth drivers:

1) strong contribution of Nutrition, which should continue to grow as a portion of operating income

2) Phase 1 trade agreement with China, which should benefit 2H:20 results

3) reversal of ASF headwinds and “professionalization” of protein industry in China, which could structurally improve meal demand in the country

The analyst stated "Impacts from the Phase 1 trade agreement between the U.S. and China expected to manifest in 2H:20, which we view positively. ADM indicated China appears to be complying with Phase 1 conditions of the trade deal, which should drive higher export volumes (and potentially margins) towards the back-half of 2020. This would be favorable for ADM’s ASO business, though the company does not currently incorporate a margin lift into guidance".

For an analyst ratings summary and ratings history on Archer Daniels Midland click here. For more ratings news on Archer Daniels Midland click here.

Shares of Archer Daniels Midland closed at $45.80 yesterday.

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