UPDATE: Da Davidson Upgrades Hormel Foods to Neutral on Execution

Da Davidson upgraded Hormel Foods HRL from Underperform to Neutral and raised the price target from $25.00 to $38.00. Da Davidson commented, "Shares remain at a premium valuation, trading above even its packaged-food peers. Yet the execution is, as usual, near flawless. Our price target goes to $38, previously $25, based on 17.3x our FY14 EPS estimate – well above its protein peers Smithfield Foods (SFD* - BUY - $22.40) and Tyson Foods (TSN* - BUY - $23.38) trading at 6.3x and 9.2x 2014 EPS, respectively. So while we are concerned about the valuation gap to its protein peers and other packaged foods equities, we acknowledge the strong consistent growth Hormel has delivered. We are upgrading the shares to NEUTRAL, previously Underperform." Hormel Foods closed at $36.12 on Wednesday.