Source:  Tom Johnston, MEATINGPLACE.COM, 4/12/10

Following Sanderson Farms' announcement that it will build a new poultry complex in Goldsboro, N.C., that eventually will boost production by 30 percent, BMO Capital Markets analyst Kenneth Zaslow upgraded the company's stock rating to "outperform" from "market perform."

Zaslow wrote in a note to investors that his upgrade reflects strong near- and intermediate-term market fundamentals and Sanderson's "superior business model." He cited improved breast prices and "resilient" leg prices; lower corn prices; constrained supply and tight competing protein supplies.

Zaslow also highlighted the company's product mix toward fresh chicken and "the ongoing improvement in SAFM's superior operations."

"There could be greater opportunity for shareholders," Zaslow wrote, "as 1)leg prices would jump to at least the low $0.40s if Russia were to reopen its borders and 2)SAFM's stock becomes an option on the potential recovery of foodservice in 2011, as our $6 [earnings-per-share] outlook would prove conservative if foodservice demand rebounds."

Zaslow also raised its stock price target to $70, implying 11 to 12 times his fiscal 2011 earnings-per-share estimates.

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