J.P Morgan Comments On Dean Foods Ahead Of Earnings Report

Dean Foods DF reports its fourth quarter this coming Thursday morning. J.P Morgan's estimate is $0.12, two cents below the consensus and well off the $0.31 of a year ago. While the recent entry of a well-known hedge fund manager has created some interest in the shares, JPM remains cautious. At this stage, however, any improvement, however minor, is likely to be well received by the market. The U.S. dairy profit pool, a rough measure of industry health, has begun to climb after the free fall that began in the spring of 2009. Syndicated data, moreover, continues to show positive pricing in the dairy case. JPM believes Dean may at last be getting some of the incremental margin. Dean's strategy of cost cutting will take years to play out. Soy's poor showing in syndicated data is also a concern. While JPM believes Dean's fundamentals have stabilized, as yet it sees insufficient upside to warrant a more aggressive view. JPM also looks forward to Deans' appearance at the upcoming CAGNY conference in Florida. J. Morgan has a $10 PT and Neutral rating on DF DF is trading higher at $10.53