Source:  Lisa M. Keefe, MEATINGPLACE.COM, 4/29/11

Having accomplished much of what it set out to do with its restructuring, Smithfield Foods Inc. now offers less upside in its stock price, wrote Deutsche Bank equity analyst Christine McGlone in a report to investors. She downgraded the stock to a “hold” from a previous “buy” recommendation.

She noted also that the company’s financial performance in the near future likely will be affected by the prospective acquisition of Campofrio, a drop in export demand, tighter packer margins and hints that the hog herd is rebuilding after a painful reduction nationwide over the last couple of years.

Demand seems to have slackened industry-wide, due to prices and perhaps to earlier market saturation, McGlone said. A Campofrio acquisition may change Smithfield’s debt-reduction plans and schedule. And then there are the post-recession problems with attaining credit and the growing feed costs.

McGlone left her earnings projections for Smithfield’s fiscal 2011 and 2012 unchanged at $2.99 and $2.73 per share, respectively.
 

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