Goldman Sachs Reiterates Neutral and PT of $48 on Sanderson Farms

Goldman Sachs reiterated its Neutral rating and price target of $48 on Sanderson Farms SAFM, in spite of expectations of a sharp decline in the company's earnings this year. In a research report published today, Goldman Sachs stressed it feels confident the company can overcome rising feed costs and sluggish meat prices. In the report, Goldman states, "Despite prospects for sharp losses in 2011, we remain constructive on the 2012 outlook, and expect that modest chicken production growth coupled with low single-digit export increases will drive chicken prices 10-15% higher. This improved price along with muted cost inflation should allow SAFM to book far improved returns next year, our forecast assumes $0.05 per lb of EBIT ongoing. We lower our 2012 and 2013 EPS forecasts to $4.09 and $4.49 from $4.27 and $4.75 prior to reflect this profit outlook and some changes to capital deployment given more severe losses in 2011." On Tuesday, Sanderson Farms closed the day at $45.13.