Jefferies Raises Price Target on Smithfield Foods (SFD), Sees Upside to Q2 Expectations
Tweet
Share
E-mailGet Alerts SFD Hot Sheet
Price: $22.56 -0.88%
Rating Summary:
11 Buy, 6 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 12 | Down: 21 | New: 20
Rating Summary:
11 Buy, 6 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 12 | Down: 21 | New: 20
Join SI Premium – FREE
Jefferies is reaffirming its Buy rating on shares of Smithfield Foods (NYSE: SFD) and is increasing its price target from $26 to $27 as it sees upside to Q2 expectations.
The firm believes current hog and pork prices topped with falling feed costs points to an earnings upside. For Q2, which the company is expected to announce on December 8, Jefferies estimates earnings of $0.75 per share, well above the Street's forecast of $0.69 per share.
Management increased its fiscal 2012 major business guidance for each segment back in the beginning of November. Some of the notable adjustments include seeing pork operating profits above $7 per pound, packaged meat operating profit over $0.15 per pound, and hog production profit of $10-$15 per head.
While the Street's consensus estimates have not gone up much following the release of the new guidance, Jefferies does note that share of SFD increased 12 percent in November when the S&P 500 performance was flat.
An analyst at Jefferies comments, "Moderating feed prices and a 25% Y/Y jump in live hog prices have kept hog production margins in black over last 3 months, which is extremely rare, especially for late summer/early fall which has historically seen seasonal industry losses. Based on the strong counter-seasonal move made by both live hog prices & generic hog profitability in the last 8 weeks of the quarter, our $17/head F2Q estimate could prove conservative."
For FY12 and FY13, the firm estimates EPS of $2.58 and $2.82 on sales of $13.06 billion and $13.23 billion.
For an analyst ratings summary and ratings history on Smithfield Foods click here. For more ratings news on Smithfield Foods click here.
Shares of Smithfield Foods closed at $24.37 yesterday.
The firm believes current hog and pork prices topped with falling feed costs points to an earnings upside. For Q2, which the company is expected to announce on December 8, Jefferies estimates earnings of $0.75 per share, well above the Street's forecast of $0.69 per share.
Management increased its fiscal 2012 major business guidance for each segment back in the beginning of November. Some of the notable adjustments include seeing pork operating profits above $7 per pound, packaged meat operating profit over $0.15 per pound, and hog production profit of $10-$15 per head.
While the Street's consensus estimates have not gone up much following the release of the new guidance, Jefferies does note that share of SFD increased 12 percent in November when the S&P 500 performance was flat.
An analyst at Jefferies comments, "Moderating feed prices and a 25% Y/Y jump in live hog prices have kept hog production margins in black over last 3 months, which is extremely rare, especially for late summer/early fall which has historically seen seasonal industry losses. Based on the strong counter-seasonal move made by both live hog prices & generic hog profitability in the last 8 weeks of the quarter, our $17/head F2Q estimate could prove conservative."
For FY12 and FY13, the firm estimates EPS of $2.58 and $2.82 on sales of $13.06 billion and $13.23 billion.
For an analyst ratings summary and ratings history on Smithfield Foods click here. For more ratings news on Smithfield Foods click here.
Shares of Smithfield Foods closed at $24.37 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- BofA sees Micron EPS topping $230 by FY30, calls peak fears overblown
- Yum! Brands (YUM) PT Lowered to $180 at Argus
- DA Davidson Reiterates Buy Rating on Boost Run (BRUN)
Create E-mail Alert Related Categories
Analyst CommentsRelated Entities
Jefferies & Co, Standard & Poor's, EarningsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
