J.P Morgan Gives Smithfield Foods Analyst Day Review

Smithfield Foods

hosted its first analyst day yesterday, and J.P Morgan thought that the firm succeeded in its primary goal: To expand investors' understanding of Smithfield as a company. J.P Morgan remains Neutral due to continued uncertainty about feed costs and a belief that the valuation is full; however, it continues to think that in the near-term, SFD carries less risk than any other protein company covered. As has been reported in numerous media outlets recently, Sara Lee may be interested in divesting some or all of its remaining businesses. It might make sense for Smithfield to purchase the meat business, which includes brands such as Hillshire Farms, since on more than one occasion yesterday management said it was not happy being #2 in deli meats. But each member of management with whom J.P Morgan spoke said that the company was not interested in over-paying for the brands and that, in their words, the multiple was too steep. Whether this is gamesmanship or not remains to be seen but at least on the surface, Smithfield seemed less than interested in buying the properties. J.P Morgan has a Neutral rating and $21 PT on SFD SFD closed Tuesday at $20.56