Investors Wary of Turn in Chicken Cycle
Despite a solid earnings report from Pilgrim’s Pride and projections for an even stronger performance in 2015, investors are looking past the good times and bracing for a turn in the chicken market cycle, one Wall Street analyst said Friday.
Pilgrim’s confirmed expectations that greater exports of hatching eggs to Mexico are removing up to 2 percent of supply from the U.S. market, the analyst noted. This should mitigate the impact of stronger pullet data and heavier weights. The adjusted U.S. breeder count this year could be in line with 2014, Hundley said.
Lower-than-expected feed costs bolstered Pilgrim’s fourth-quarter earnings, and pricing was in line with expectations.
But investors remain wary of growth in supply, which has weighed on the stock.
No matter the strength that should remain in place this year, we think that the recent share price decline for PPC is evidence that investors are now looking past this cycle.
Pilgrim’s on its fourth-quarter earnings call said demand for chicken is more than outpacing supply.
Limited industry supply growth and tight beef supplies should continue to drive strong pricing and support Pilgrim’s earnings, Stephens Farha Aslam said.
Source: meatingplace.com, 2-13-2015