Goldman Sachs Reiterates Buy on Sanderson Farms on Quarterly Beat

Goldman Sachs remains Buy-rated on Sanderson Farms

as the company posts better-than-expected quarterly results. Goldman Sachs notes, "SAFM (CL-Buy) reported 2QFY12 (April end) EPS of $1.04, modestly below our $1.15, but above the $0.95 consensus. On the EBIT line results were nearly in line with our Street-high estimate ($41 mn versus GS $42 mn), while below-the-line items drove -$0.07 of the miss versus our number. …We believe this solid beat versus Street estimates is the first in a string of beats that will drive shares ahead, with GS 2013 EPS 25% ahead of the Street. The key driver of upside remains a substantial tightening in chicken supplies, with the most recent data on chicken breeder (pullet) placements (-7% yoy) and inventory in cold storage (-17% yoy) supporting this view." SAFM closed at $54.31 on Friday.