Market Overview

Barclays Downgrades Hormel Foods After Undercooked Q3

Share:
Barclays Downgrades Hormel Foods After Undercooked Q3
Related HRL
Jim Cramer Weighs In On Palo Alto, Blackstone And More
Benzinga's Top Upgrades, Downgrades For November 27, 2018

Hormel Foods Corp (NYSE: HRL) reported lower-than-expected third-quarter sales Thursday.

The Analyst

Barclays' Benjamin Theurer downgraded Hormel Foods Corp. from Overweight to Equal Weight and left the price target unchanged at $38.

The Thesis

The downgrade comes due to weaker-than-expected earnings results and a more cautious view of the company, Theurer said in a note. (See the analyst's track record here.) 

Hormel cut 2018 sales guidance from a range of $9.7-$10.1 billion to $9.4-$9.6 billion.

The analyst said he has a more neutral view on the food stock for the following reasons: 

  • An imbalance of the supply and demand of the pork business. 
  • Uncertainty in the international segment due to trade tariffs and consequent volatility. 
  • Continued sluggish performance from the Jennie-O Turkey Store and other businesses.
  • At 20 times F2018 P/E, Theurer said Hormel's valuation is less attractive than that of peers, with little room for upside. 

Most of Hormel's headwinds are expected to continue, Theurer said, adding that he remains cautious on the JOTS business in 2018 and the first half of 2019. 

Hormel's ability to partially offset pressure from the commoditized segment is a positive in its earnings report, the analyst said. 

The Price Action

Hormel shares were trading up 1.3 percent to $37.83 at the time of publication Friday. 

Related Links:

Benzinga's Top Upgrades, Downgrades For August 24, 2018

Mid-Morning Market Update: Markets Edge Higher; Hormel Foods Sales Miss Views

Photo by Qwertyxp2000/Wikimedia.

Latest Ratings for HRL

DateFirmActionFromTo
Nov 2018JefferiesDowngradesBuyHold
Nov 2018Credit SuisseMaintainsNeutralNeutral
Nov 2018Vertical GroupDowngradesHoldSell

View More Analyst Ratings for HRL
View the Latest Analyst Ratings

Posted-In: Barclays Benjamin TheurerAnalyst Color Downgrades Price Target Analyst Ratings Best of Benzinga

 

Related Articles (HRL)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
MDRXKeyBancUpgrades0.0
ANETNomuraUpgrades260.0
CNPRBC CapitalUpgrades34.0
FISVOppenheimerUpgrades88.0
FNDUBSUpgrades37.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Mid-Afternoon Market Update: Crude Oil Up 1.75%; Splunk Shares Jump After Strong Q2 Earnings

What's Going On With Geron?