On Monday, Barclays (LON:BARC) retained its Equalweight rating on Pilgrim's Pride Corporation (NASDAQ:PPC), with a steady price target of $45.00. The firm adjusted its sales forecast for the company slightly downwards to $4.6 billion, marking a 5% year-over-year increase.
This revision is attributed to the negative effects of foreign exchange rates in Mexico and a deceleration in consumer spending within the country. The projections for Pilgrim's Pride's operations in the U.S. and Europe remain unaltered, with anticipated growths of 10% and 1%, respectively.
The analyst from Barclays anticipates that consolidated growth for Pilgrim's Pride will be driven by improved pricing and increased volumes compared to the previous year. Notably, profitability is expected to see a substantial rise due to a stronger sales foundation, favorable market conditions for all three poultry types, and more advantageous grain inputs year-over-year.
The firm forecasts that Pilgrim's Pride's adjusted EBITDA will surge by approximately 80% to $583 million, with margins expanding by 530 basis points. Despite the lower sales estimate, the bottom line is projected to benefit from consistent financing and tax rates, leading to an adjusted earnings per share (EPS) of $1.43, which is lower than previous estimates but still significantly higher year-over-year.
In other recent news, Pilgrim's Pride Corporation has agreed to a $100 million settlement in an antitrust case, resolving allegations of collusion with competitors to suppress chicken farmers' compensation. This settlement, awaiting approval, is the final one in the case, with total compensation to plaintiffs reaching $169 million, excluding legal costs.
Additionally, BofA Securities recently adjusted its stance on Pilgrim's Pride stock, shifting the rating from Buy to Neutral, while holding a price target of $47.00. This change reflects a cautious outlook for the company's shares, citing potential headwinds such as challenging profitability comparisons and a potentially weaker seasonal period toward the year's end.
BMO Capital Markets has also weighed in, raising their target price for Pilgrim's Pride from $43.00 to $46.00, while maintaining an Outperform rating. This adjustment follows the company's impressive second-quarter earnings report, which revealed an EBITDA of $656 million, surpassing the consensus estimate of $543 million, largely due to strong margins in various markets.
In other developments, Pilgrim's Pride reported a substantial cash balance of $1.3 billion and net revenues of $4.6 billion in Q2, marking a 5.8% increase year-over-year. The company also plans to invest in key areas and seek growth opportunities, including facility expansions and exploring new markets.
InvestingPro Insights
Recent data from InvestingPro aligns with Barclays' optimistic outlook on Pilgrim's Pride Corporation (NASDAQ:PPC). The company's market cap stands at $10.96 billion, with a P/E ratio of 14.58, indicating a relatively attractive valuation. This is further supported by an InvestingPro Tip suggesting that PPC is "trading at a low earnings multiple."
In line with Barclays' projection of substantial profitability growth, InvestingPro data shows an impressive EBITDA growth of 78.8% over the last twelve months as of Q2 2024. This robust growth is reflected in the stock's performance, with a remarkable 88.3% price total return over the past year.
Another InvestingPro Tip highlights that "net income is expected to grow this year," which corroborates Barclays' forecast of improved bottom-line performance. The company's financial health appears solid, with InvestingPro noting that "liquid assets exceed short term obligations" and PPC "operates with a moderate level of debt."
For investors seeking more comprehensive analysis, InvestingPro offers 11 additional tips for Pilgrim's Pride Corporation, providing a deeper understanding of the company's financial position and market performance.
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