Sanderson Farms Down 5% After Q2 Earnings

Shares of Sanderson Farms

gapped higher at the open on Tuesday after the company reported second-quarter earnings results which exceeded analysts' estimates. The stock, however, has been sold aggressively since the opening bell and was last trading down more than 5% at $51.27. The company reported net income of $23.87 million or $1.04 per share, compared to a loss of $16.28 million or $0.74 per share, in last year's second-quarter. This compared to Wall Street analysts' consensus EPS estimates of $0.95. Sales in the quarter came in at $595.05 million versus $479.34 million last year. This also came in ahead of Wall Street consensus revenue estimates of $591.25 million. Analysts at Morgan Stanley advised clients to sell into any strength in the stock this morning and reiterated their "Sell" rating on the stock in the wake of the Q2 results. They advised that investors could be overestimating chicken prices headed into the second half of the year and that prices could moderate going forward. Goldman Sachs' analysts took a different tack, and reiterated their "Buy" rating on the stock this morning. They wrote, "we remain bullish on SAFM as we believe the chicken upcycle is the most powerful story in proteins, with a contraction in supply likely to drive profitability higher through at least 2013."