- Negative sentiment on industry is `fully baked into the stock'
- U.S. chicken prices have been hurt by avian flu outbreak
Sanderson Farms Inc., the fourth-largest U.S. chicken producer, rose the most in more than three years after analysts at CLSA Americas LLC said prices for the meat are approaching a bottom.
Shares of the Laurel, Mississippi-based company gained 7 percent to $75.63 in New York, the biggest increase since August 2012. Pilgrim’s Pride Corp., the second-biggest producer, climbed 5.9 percent to $22.10.
U.S. chicken prices have been hurt by import bans on poultry imposed by countries such as South Korea, Russia and Thailand after a domestic avian-influenza outbreak earlier this year that mainly hit egg-laying flocks and turkey farms. The sharpest declines in chicken prices “are behind us,” CLSA analysts led by Jeremy Scott said in a note Thursday.
“Negative sentiment on chicken industry is fully baked into the stock and a bottom may be forming here,” Scott said in the note.
CLSA upgraded the Sanderson shares to the equivalent of a buy rating from sell and raised the price target to $80 a share from $69.