UPDATE: JP Morgan Initiates Archer-Daniels-Midland at Underweight on Capacity and Margin Pressures

JP Morgan initiated coverage on Archer-Daniels-Midland

with an Underweight rating and a $28 price target. JP Morgan noted, "ADM's North American capacity (67% of total) is likely to remain under pressure for the foreseeable future as a result of the Midwest drought and the resulting lack of supply of crops; this is likely to pressure margins in its Oilseeds Processing and Ag Services businesses in H1'13. In addition, ADM's ethanol business continues to face demand as well as cost headwinds, and margins could get worse before they get better. While ADM is already trading at a discount to peers and was down 2% in 2012 (vs. S&P up 16%), we believe this is justified given the continued earnings risk in several businesses; hence, our Underweight rating with a YE'13 price target of $28." Archer-Daniels-Midland closed at $29.22 on Friday.