Source:  Rita Jane Gabbett, MEATINGPLACE.COM, 8/2/10

BMO Capital Markets analyst Kenneth Zaslow has raised his fiscal 2010 earnings forecast for Pilgrim’s Pride, despite the fact that the company on Friday reported lower second quarter sales and profits, and despite industry concerns about rising feedgrain prices.

Zaslow raised his fiscal 2010 earnings forecast to 47 cents per share from 38 cents.
In a note to investors, he cited four reasons for his optimism:
1. Pilgrim’s Pride’s 3.1 percent U.S. chicken margins illustrate initial signs that management has begun to improve underlying operating efficiencies by shifting toward value products, generating over $40 million in costs savings, regaining lost volume, and gaining market share across channels.
2. The company will likely be positioned to expand margins sequentially the reopening of the Russian market, improvement in product mix, and higher operating efficiencies. On Friday company executives indicated leg quarter sales to Russia are averaging 60 cents per pound for August and over 60 cents for September.
3. Pilgrim’s Pride expects total production to increase 3 percent (including higher weights) in 2011, which will still ensure production below 2008 levels.
4. The company is expected to begin deploying capital expenditures to improve operating efficiencies and reduce debt by at least $100 million.

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