BB&T Capital Markets is raising its earnings estimates on Sanderson Farms, Inc. SAFM, as it believed it had a strong quarter. It has a Hold rating on shares.
In the research note, BB&T writes, "We believe SAFM enjoyed a very strong Q4 due to strong exports to Russia at attractive prices, as well as very strong breast meat pricing in the U.S., which reflected tighter supplies due to excessive heat in producing regions, as well as stabilization in foodservice demand. Thus, we have increased our Q4 EPS estimate to $1.85 from $1.35. However, we have lowered our FY'11 expectation to $2.05 from $4.70, due to the run-up in feed costs, against which we believe SAFM has no hedges. We have also introduced quarterly estimates for FY'11. Please see our recent industry notes from 10/21 and 10/26 for a much more indepth view on feed cost inflation and overall industry dynamics."
Shares of SAFM gained 5 cents on Friday to close at $41.98.
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