November 20, 2007

Analysts drop Smithfield earnings forecast

A Wall Street analyst dropped her 2008 earnings forecast for Smithfield Foods Inc. due to falling hog prices.

Meanwhile, JPMorgan analyst Pablo Zuanic Monday downgraded Smithfield's company stock to "neutral" from "overweight."

BB&T Capital Markets reduced its earnings forecast for the fiscal year ending April 30, 2008 to 93 cents per share from $1.07. Meanwhile, it raised its fiscal 2009 forecast slightly to US$1.21 from US$1.19 per share.

Analyst Heather Jones, Agribusiness/Consumer Foods Analyst, said the increased fiscal 2009 forecast reflects more bullish prepared food margin due to lower input costs, offset somewhat by weaker beef packing margin projections.

Live hog prices averaged US$34 per hundredweight in the current quarter, down 25 percent on-year and below the estimated US$47 per hundredweight breakeven price, Jones noted.

While predicting the weak dollar will support pork exports, Jones added it would not be enough to absorb all the excess supply.