What Do Wall Street Analysts Recommend for Pilgrim’s Pride?



Analysts’ recommendations

As of June 14, 2016, Pilgrim’s Pride (PPC) was trading at $24.37. In this part of the series, we’ll see what Wall Street analysts recommend for the company after the revised estimates. We’ll also look at analysts’ target prices for Pilgrim’s Pride over the next 12 months.

About 80% of analysts rate Pilgrim’s Pride a “hold” and 20% rate it a “buy.” None of the analysts rate it a “sell.” More analysts favor “hold” ratings following the first quarter results and revised estimates.

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Analysts’ target prices for Pilgrim’s Pride

The average broker target price for Pilgrim’s Pride decreased slightly from $27 to $26.67 after its 1Q16 earnings. This is 9% higher than the closing price of $24.37 on June 14, 2016. As analysts raise their target price for the next 12 months, Pilgrim’s Pride’s share prices can increase or vice versa.

The broker target price and return potential for Pilgrim’s Pride’s peers are as follows:

  • Hormel Foods (HRL) has a target price of $39.86 and return potential of 16%.
  • Sanderson Farms (SAFM) has a target price of $94.00 and return potential of 16%.
  • Tyson Foods (TSN) has a target price of $77.67 and return potential of 28%.

Tyson and Hormel are a part of the Consumer Staples Select Sector SPDR Fund (XLP). XLP invests 1.3% of its portfolio in Tyson and 0.79% in Hormel. Pilgrim’s Pride forms 1.3% of the holdings of the AdvisorShares TrimTabs Float Shrink ETF (TTFS).

BMO Capital Markets downgraded Pilgrim’s Pride

Recently, BMO Capital Markets downgraded Pilgrim’s Pride to “market perform” from “outperform.” They even lowered its price target to $27 from $29. In a note to investors, BMO mentioned, “Our case for aggressively investing in PPC is less persuasive at current valuations and as expectations continue to build despite a surge in feed costs, particularly soybean meal.”

However, the firm maintained its overarching view of the company. It stated that “We continue to believe that PPC deserves a premium multiple to its history, as PPC and its management team have structurally improved its business model profile in terms of operational improvements, product mix, balance sheet strength, and capital allocation.”

On a higher side, Stephens gave Pilgrim’s Pride the highest target price of $30. This represents a return potential of 23% as of June 14. It rates the stock a “strong buy.” On the lower side, Jefferies gave Pilgrim’s Pride a “hold” rating. It assigned the company a lower target price of $23.


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