UPDATE: BMO Capital Markets Reiterates Market Perform Rating, Raises PT on Smithfield Foods

In a report published Friday, BMO Capital Markets reiterated its Market Perform rating on Smithfield Foods

, and raised its price target from $22.00 to $26.00. BMO Capital noted, “First, we remain encouraged that SFD continues to successfully shift its business model to deliver more consistent results, including developing a stable packaged meat business, operating its hog production business to limit volatility, and deleveraging its balance sheet to a point that SFD could repurchase 17% of the company. Second, SFD appears best positioned across the protein industry as fundamentals continue to become more favorable given potentially higher hog prices with EU sow liquidation, hedges creating a bridge to an improvement in hog margins in the summer, momentum in packaged meat, and strength in fresh pork margins. Third, SFD has the potential to build toward delivering on its earnings power in FY14 assuming more favorable crop conditions as hog production margins could return to the normalized range. That said, we would like to better understand SFD's ability to deliver returns on capex projects and would prefer SFD to focus on organic growth opportunities within its packaged meats business rather than acquisitions given challenges in integrating acquisitions faced by packaged food companies.” Smithfield Foods closed on Thursday at $22.98.