Morgan Stanley Boosts Smithfield FY EPS Estimates

Morgan Stanley has raised its full year 2010 estimates for meat wholesaler Smithfield Foods (NYSE: SFD). The bank boosted its EPS target significantly, from the former -$1.85 to -$1.22, although it reiterated its equal weight rating on the stock.

The EPS boost was a mark-to-market improvement due to a recent improvement in lean hog prices, as well as industry packer margins. Despite rising costs for the wholesaler, Morgan Stanley believes that demand for pork will support the increased prices and thus improve the bottom line.

The bank feels that these improvements will be reflected immediately in SFD’s results. In addition to narrowing the anticipated FY 2010 loss, the bank has also done so for the company’s upcoming 2Q. The former EPS estimate of -$0.65 for the quarter has now been increased to -$0.49.