Pilgrim’s Pride Quarterly Earnings Disappoint

US chicken processor Pilgrim’s Pride reported fourth-quarter earnings and revenue, which lagged the Street’s estimates.

During 4Q, Pilgrim’s Pride’s (PPC) revenue increased 1.8% year-on-year to $3.12 billion, falling short of analysts’ expectations by $190 million. The company reported Non-GAAP earnings per share (EPS) of $0.25, missing the Street consensus by $0.09.

Meanwhile, adjusted EBITDA margin increased to 6.6% in 4Q from 5.3% in the comparable year ago period.

For fiscal 2020, sales rose to $12.01 billion from $11.41 billion year-on-year. Earnings plunged to $0.39 per share from $1.83 per share during the same comparative period. Adjusted EBITDA margin fell 2% during the year to 6.5%.

Pilgrim’s Pride CEO Fabio Sandri said, “While conditions in the chicken market were challenging in 2020, the company managed to achieve increased performance over the prior year on the back of a diverse global footprint.”

Sandri expects specialty products to constitute larger portion of the company’s results over the next few years as it moves away from commodity sales to achieve higher margins. (See Pilgrim’s Pride stock analysis on TipRanks)

On Feb. 8, Stephens analyst Ben Bienvenu upgraded the stock to Buy from Hold and raised the stock’s price target to $25 (8.9% upside potential). Ben sees chicken prices improving after a multi-year down cycle. Further, he expects higher red meat prices contributing to higher chicken demand, which he believes will be a catalyst for the Pilgrim’s stock.

The rest of the Street is bullish about the stock with a Strong Buy consensus rating. That’s based on 3 Buys. The average analyst price target of $25 implies 8.9% upside from current levels.

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