Jefferies Reiterates Buy on Smithfield Foods, Reduces PT to 24

Jefferies reiterated its Buy on Smithfield Foods

. At the same time, Jefferies lowered its price target on the company's stock from $26 to $24. In a research report published today, Jefferies stressed that Smithfield's traders are currently undervalued, in spite of the company's problems. In the report, Jefferies states, "SFD shares have dropped 20% over the last 6 weeks as industry pork processing margins saw unprecedented contraction - the result of a 15% jump in live hog & 3% drop in pork prices. While we acknowledge that the FY12 Street estimate needs to come down, SFD's current valuation (5X EBITDA) implies FY12 margins will be cut almost in half - unlikely in our view." On Friday, Smithfield closed the week at $19.02.