UBS Starts Smithfield Foods (SFD) at Buy

UBS analyst Manav Gupta initiates coverage on Smithfield Foods (NASDAQ: SFD) with a Buy rating and a price target of $26.00.

The analyst comments: "We initiate coverage of Smithfield Foods with a Buy rating and a PT of $26/share. We believe the market is underappreciating SFD’s integrated business model and productivity initiatives, and we see a catalyst in its potential for a dividend in-line with its target payout ratio (+30% of net income). SFD is America’s largest fresh pork processor with ~23% market share. The company’s key segments consist of packaged meats (highest margin), fresh pork (improving margins on lower volumes), and hog production (targeting breakeven). SFD embarked on a strategy to optimize the size of its hog production and procure a larger percentage of hogs from independent suppliers (~70% vs. 50%). This allows SFD to reduce capital investment, lower costs, and limit exposure to more volatile areas of the value chain. Packaged Meats segment will be the primary growth driver. We forecast a total operating profit CAGR of ~5% between 2024-2029."

For an analyst ratings summary and ratings history on Smithfield Foods click here. For more ratings news on Smithfield Foods click here.

Shares of Smithfield Foods closed at $21.10 yesterday.

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