Credit Suisse First Boston cut its investment recommendation on Pilgrim's Pride (PPC ) to neutral from outperform.
Analyst Daniel Nelson said that chicken markets appear to be reacting to rising supplies and steady demand. He says that skinless boneless breast prices have declined from over $1.50 in September to $1.30 today, and the magnitude of the decline has become too big to ignore, especially over the past week or so. He thinks this is not good so shortly ahead of the key processing period for the 2006 foodservice contract. He says that for every penny change in the price of the whole bird chicken per pound, earnings per share changes by 50 cents a share. He kept his estimates, but lowered his target to $31, or 9 times fiscal year 2006 earnings per share estimates.