J.P. Morgan Lowers Sanderson Farms FY12 Estimate

J.P. Morgan is lowering its FY12 EPS estimate for Sanderson Farms, Inc.

to $0.03 from $1.95 versus the Street's $3.04. “Though we fully expect chicken supply cuts to come, we wonder whether, in the near term, they will be deep enough to drive earnings as high as believed,” J.P. Morgan writes. “Keep in mind that we still are forecasting an improvement of $3.63 between this year and next, so we are modeling a substantial improvement. “Indeed, this illustrates our challenge in becoming more positive on SAFM: even if we assume significantly higher chicken prices and no changes to the corn futures curve (which we do), we still cannot get our model anywhere near the $3+ estimated by the Street. We reiterate our Underweight rating.” Sanderson Farms closed Tuesday at $45.13.