UPDATE: BMO Capital Markets Upgrades Smithfield Foods to Outperform on Pork Demand Outlook

BMO Capital Markets raised its rating on Smithfield Foods SFD from Market Perform to Outperform and increased its price target from $26 to $28. BMO Capital Markets commented, "We are upgrading SFD to Outperform from Market Perform as the recovery in pork margins, hedges, a rebound in hog margins to within SFD's normal range by the summer, and share repurchases should create upside to expectations beginning in FY4Q13 continuing through FY2014. … Notably, the futures curve implies hog production margins of $10/head in May, which is within SFD's normalized range. Importantly, SFD's internal efforts – share repurchase, hedges, strong balance sheet, and focus on packaged meats – create earnings stability that has eluded SFD for more than a decade." Smithfield Foods closed at $21.57 on Monday.