US: JP Morgan lowers Sanderson Farm estimates
JP Morgan has lowered its earnings estimates for Sanderson Farms as volatile chicken prices put pressure on the company.
In a note to investors the bank's analyst, Pablo Zuanic, cut his earnings estimate for the company to US$2.46 a share in 2006 - down from a previous estimate of US$3.94.
He also lowered his earnings estimate for 2007 to US$3.12 a share from a previous forecast of US$3.94.
The research note said: "Chicken prices for leg quarters and boneless skinless breast prices are near three-year lows, and we expect prices to come back to more average historical levels based on domestic demand and supply trends, and our expectation is that overseas markets will start to stabilize.
"However, given the volatility and lack of visibility on chicken prices (what will be the eventual sustained impact from [avian flu]), we believe it is best to value the group on normalised earnings and compare with historical averages and relative to the group."
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