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What Do Analysts Recommend for Archer Daniels Midland?

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Target prices

As on May 6, Archer Daniels Midland’s (ADM) rating by Wall Street analysts remained the same since we discussed the earnings preview. Around 92% still rate Archer Daniels Midland a “hold” and ~8% gave it a “buy” rating. No analysts rated it a “sell.” The average target price for Archer Daniels Midland rose to $39.13 after the earnings release. This target price is 2.3% higher than the closing price of $38.20 on May 6.

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As on May 6, Archer Daniels Midland’s target price has fallen by ~8% from $42.50 since its disappointing earnings in 4Q15. Archer Daniels Midland’s peers in the industry such as Bunge (BG), Ingredion (INGR), and B&G Foods (BGS). They have average broker target prices of $71.20, $119.0, and $41.50, respectively. These figures imply returns of ~14%, 1.2%, and -3.8%, respectively, in the next 12 months.

These stocks are all part of the First Trust Consumer Staples AlphaDEX Fund (FXG). FXG invests 3.0% of its holdings in Archer Daniels Midland and 1.5% in Bunge. FXG also invests in General Mills.

To gain exposure to General Mills, you can invest in the Victory CEMP US EQ Incom Enhanced Volatility Wtd Index ETF (CDC) and the PowerShares S&P 500 High Dividend Low Volatility Portfolio (SPHD). They invest ~3% of their portfolios in General Mills.

Analysts’ recommendations

As on May 6, Macquarie assigned Archer Daniels Midland a “strong buy” rating with the highest target price of $45. This is 0.68% higher than the closing price of $39.73 on April 26. They increased their target price from $40 to $45 after the earnings release.

On April 13, Morningstar downgraded the stock from a “strong buy” to a “hold” rating with no target price. Stephens and Credit Suisse gave the second-highest target price of $40 to Archer Daniels Midland. This is 4.5% higher than the closing price of $38.20 on May 6. Both rate the stock a “hold.”

Others who rated Archer Daniels Midland a “hold” are J.P. Morgan, Stifel, Argus Research Group, Morgan Stanley, BMO Capital Markets, Buckingham Research Group, and Goldman Sachs. Stifel, Morningstar, and Argus Research Corp didn’t provide a target price for Archer Daniels Midland. However, they all rate the stock a “hold.” Morgan Stanley gave the lowest target price of $33 to Archer Daniels Midland.

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