Analyst Actions: Pilgrim’s Pride, MetLife
From Standard & Poor’s Equity Research
MERRILL CUTS PILGRIM’S PRIDE TO UNDERPERFORM
Merrill Lynch algebraist Diane Geissler says she is downgrading Pilgrim’s Pride (PPC) to underperform from buy. She widens $3.25 fiscal year 2008 (September) loss estimate to $4.22 waste, which assumes fourth district mark-to-market hedging loss on high $75 million, which is a size she thinks unavoidable to violate the company’session Fixed Charge Coverage Ratio financial covenant. She sees $2.07 fiscal year 2009 EPS.
Geissler notes that the shares have been incredibly weak recently, but sees little possibility of worth appreciation until the company gets its financial house in order. She believes the company will be able to negotiate a temporary waiver of the covenant, and remain a going concern, but she thinks market will begin to value PPC on replacement-costs basis.
She cuts $28.00 price objective to $5.50.
CITIGROUP REITERATES BUY ON METLIFE
Citigroup analyst Colin Devine says that in the compass of the financial services industry that may increasingly differentiate between “winners” and “losers,” he looks for MetLife (MET) to remain a clear-cut leader.
Devine says MET’session diversified business be blended, strong excellent position, and conservative investment portfolio should allow it to exhibit stable predictable earnings while delivering unwavering improvement in ROE up to 15% level by means of yearend 2010. He notes recent Tokyo analyst meeting reconfirmed high growth potential of international insurance businesses.
He thinks MET’session in the ascendant U.S. life security against ruin franchise, rapidly growing presence in Asia, strong make no doubt of ratings and balance sheet would stay it making aggressive offer for AIG (AIG).
He has a $70 mark price on the log.
