Source:  Lisa M. Keefe, MEATINGPLACE.COM, 10/14/10

Smithfield Foods Inc.’s financial prospects look good against a backdrop of fluctuating hog and corn prices, wrote BMO Capital Markets equity analyst Kenneth B. Zaslow, in a note to investors.

Zaslow upgraded Smithfield’s stock rating to “outperform,” he wrote, “because we expect lower hog production, tight pork inventory levels and limited overall protein availability to create higher hog and pork prices in 2011.”

Also, he expects Smithfield’s risk management and hedging activities will insulate the company from rising corn prices and the expected -- temporary -- drop in hog prices between now and the end of the calendar year.

Finally, Zaslow notes, the company should be able to capitalize on the strength of pork packer margins and its shift toward packaged meats, along with reduced debt, to boost margins.

Zaslow boosted his expectations for earnings in the company’s 2011 fiscal year to $1.98 per share, up from an earlier projection of $1.91 per share.

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