PPC - Pilgrim's Pride up on BMO upgrade; JBS acquisition possible

2023-07-13 10:12:50 ET

Pilgrim's Pride Corporation ( NASDAQ: PPC ) jumped more than 5% on Thursday morning after BMO Capital Markets upgraded shares and raised its price target.

The firm boosted PPC to Outperform and raised its price target to $28.

“Risk/reward has become more favorable given a growing number of potential catalysts, including likely heightened investor optimism JBS acquires PPC following its proposed U.S. listing and greater probability for lower feed costs to benefit U.S. chicken margins,” BMO analyst Andrew Strelzik wrote in a note.

Brazilian meat processor JBS S.A. ( OTCQX:JBSAY ) announced on Wednesday a proposed U.S. listing of shares, increasing optimism it will acquire PPC — JBSAY already owns about 83% of PPC shares.

In addition, PPC management has a positive outlook for U.S. chicken margin recovery with lower feed costs, along with improvements to Europe operations combined with capacity expansions, BMO said.

PPC shares jumped in late April after reporting top and bottom line beats for Q1 despite elevated input costs and persistent inflation.

“Our U.S. commodity business continued to face exceptionally challenging circumstances, especially in January. Nevertheless, our diverse portfolio across bird sizes and branded offerings mitigated market impacts, whereas our intense focus on operational excellence enhanced our performance,” CEO Fabio Sandri said at the time .

Shares of PPC are down 23% over the past 12 months. PPC reports second-quarter earnings July 26.

More on food companies:

• Pilgrim's Pride gains after Bank of America turns bullish again
• Pilgrim's Pride: Still Not Cheap Enough To Justify Long Exposure
• Cell-based meat is approved in the U.S. for the first time
• Tyson’s post-earnings plunge pulls down protein-producer peers

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