Analyst: Higher leg prices, improving efficiencies to help Pilgrim’s Pride

Ahead of the Bell: Pilgrim’s Pride

NEW YORK — Higher leg prices, more stable breast prices and improving efficiencies should help chicken processor Pilgrim’s Pride Corp.’s performance this year, an analyst said Monday.

BMO Capital Markets analyst Kenneth Zaslow boosted his fiscal 2010 earnings per share estimate to 47 cents from 38 cents. That’s well ahead of the 35 cents per share analysts expect, according to Thomson Reuters.

The company, based in Greeley, Colo., said Friday that its second-quarter net income slid 38 percent as revenue fell. But Zaslow said the underlying results beat his expectations and showed improving performance in Mexico and lower interest expense and tax rates.

The company “looks interesting, in our view, particularly in light of the severe (and likely misplaced) negative sentiment across the protein industry,” he said, citing supply concerns, and the possibility for higher feed costs, which eat into margins.

He also said domestic chicken demand improved in retail and at restaurants. That has been declining for all chicken producers because people haven’t been eating out as much to save money.

The reopening of the Russian market will also help the company, which has been working through a downturn in the industry by cutting production to boost prices. The company said last week it has started to pack chicken for export to Russia, a major U.S. chicken importer that enacted a ban last winter over safety concerns.

Pilgrim’s Pride is majority owned by JBS SA of Brazil.