On Friday, BMO Capital Markets adjusted their outlook on Pilgrim's Pride (NASDAQ:PPC) Corporation (NASDAQ: PPC), a prominent player in the poultry industry, by increasing their price target on the company's shares.
The new target is set at $46.00, up from the previous $43.00, while the firm maintained an Outperform rating on the stock.
The revision followed Pilgrim's Pride's second-quarter earnings, where the company reported an EBITDA of $656 million, surpassing the consensus estimate of $543 million.
The performance was attributed to robust margins in the United States and Mexico, complemented by improving margins in the EU and UK markets.
BMO Capital's assessment highlighted Pilgrim's Pride's positive fundamental outlook for the second half of 2024 and into 2025. The firm anticipates sustainable margin tailwinds that will likely bolster the company's financial standing.
The confidence in the company's margin strength across its portfolio was a key factor in the raised price target.
The analyst's commentary shed light on the company's potential for further financial success, noting the disciplined approach to multiple assumptions while recognizing the possibility of continued upside to their estimates.
Pilgrim's Pride's substantial cash balance, reported at $1.3 billion, was also mentioned as a significant factor, presenting additional opportunities for increasing shareholder returns.
The company marked a strong Q2 performance in 2024, with net revenues reaching $4.6 billion, a 5.8% increase year-over-year, and adjusted EBITDA soaring to $666 million, up 164% from Q2 of 2023.
The strong growth was largely due to the company's strategic market positioning and the strength of its portfolio, particularly in the U.S. and Europe. The company also launched over 85 new products, including the award-winning Waitrose Popcorn Chicken with Hickory BBQ Sauce.
InvestingPro Insights
Following the upbeat assessment by BMO Capital Markets, real-time data from InvestingPro further bolsters the positive outlook for Pilgrim's Pride Corporation (NASDAQ:PPC). The company's market capitalization stands strong at $9.72 billion, and it trades at an attractive earnings multiple with a P/E ratio of 12.9. Notably, the adjusted P/E ratio for the last twelve months as of Q2 2024 is even lower at 11.78, indicating a potentially undervalued stock. Additionally, the company's revenue growth has been steady, with a 4.33% increase over the last twelve months as of Q2 2024.
InvestingPro Tips highlight that analysts are optimistic about Pilgrim's Pride, with net income expected to grow this year and three analysts having revised their earnings upwards for the upcoming period. Moreover, the strong free cash flow yield implied by the valuation and the company's ability to operate with a moderate level of debt are key factors that may influence investor confidence. It's worth noting that while the stock's RSI suggests it is in overbought territory, Pilgrim's Pride has shown a high return over the last year, with a 70.55% price total return.
For investors seeking more in-depth analysis, there are additional InvestingPro Tips available that delve into the nuances of Pilgrim's Pride's financial health and market performance. Access to these insights can be found at: https://www.investing.com/pro/PPC.
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