071223 Meat Producer Stock WatchDecember 5, 2007New York - Shares of meat producers rose after Sanderson Farms Inc. reported soaring fiscal fourth-quarter profits on higher chicken prices and a J.P. Morgan analyst said the market may be overly pessimistic about the industry's economics. The biggest share gains came from Sanderson Farms, with the stock rising $2.65, or 8.6 percent, to $33.63 in late morning trading. Although the company's earnings results missed Wall Street estimates by 1 cent per share, investors appeared to pay more attention to the profit rise and a 46 percent jump in revenue, all stemming from higher chicken prices. The stock's rise follows a drop of about 26 percent in the past three months. Other chicken producer stocks have also declined recently as more analysts predict higher supply at the beginning of the year will lead to a big drop in chicken prices. But J.P. Morgan analyst Pablo Zuanic said late Monday that "perhaps the current valuations reflect excessive pessimism about industry economics." Zuanic said Pilgrim's Pride Corp. officials told him Friday that even though supply will rise in the year ahead, chicken exports are expected to rise 10 percent. He also said that although boneless skinless breast prices have dropped since the summer, prices are not far off their five-year average, according to Pilgrim's Pride. In addition, the company noted that breast prices are still well above year-ago levels. Pilgrim's Pride shares jumped $1.25, or 4.8 percent, to $27.21. Elsewhere in the sector, shares of Tyson Foods Inc., the world's largest meat company, rose 16 cents to $14.71 while shares of pork producer Smithfield Foods Inc. edged up 46 cents to $30.28.
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