CHICAGO – Pilgrim's Pride Corp. Corp. (PPC), the No. 2 U.S. poultry producer, on Monday raised its quarterly earnings estimate, citing lower feed costs and better results in its prepared foods unit.
The company's stock soared 10 percent.
For the recently ended fiscal first quarter, the company said it now expects to earn 68 cents to 73 cents per share, up from a previous estimate of 50 cents to 60 cents.
Wall Street analysts, on average, had been looking for 59 cents per share, according to Reuters Estimates.
The company will release its first-quarter results on Jan. 24.
In November, Pilgrim's Pride issued its initial first-quarter estimates and projected fiscal 2005 earnings of $2.60 to $2.90 per share, up from $2 in fiscal 2004.
For the fiscal fourth quarter ended Oct. 2, Pilgrim's Pride profit rose to $72.3 million, or $1.09 per share, from $25.1 million, or 61 cents per share, in the year-ago period.
Also on Monday, Harris Nesbitt upgraded Pilgrim's Pride shares to "outperform" from "neutral," and boosted its target price to $37 from $31.
"We continue to expect favorable supply/demand dynamics largely reflecting a stellar U.S. corn crop to create significantly lower year-over-year corn prices for the next two to three quarters," Harris Nesbitt (search) analyst Kenneth Zaslow said in a research report.
Record-large U.S. corn and soybean crops in 2004 have resulted in lower feed prices. Poultry consultant Paul Aho estimates total feed costs are currently down $40 to $50 per ton from a year ago.
"That is a big shift. That helps a lot," he said.
Also helping Pilgrim's and other chicken producers was news last week that China was lifting its ban on U.S. chicken. China had banned U.S. chicken in early 2004 after an outbreak of bird flu. Prior to the ban, China and Hong Kong were leading destinations for U.S. chicken exports.
"Chicken is in a pretty good spot now. Exports are opening up. China lifted the restrictions on U.S. poultry. Production of U.S. chicken is not increasing very fast, so things seem to be going pretty well," said Aho.
Pilgrim's Pride's shares rose $3.18 to $32.38 on the New York Stock Exchange (search) shortly after midday.