Goldman Upgrades Sanderson To Buy, Lifts PT On Valuation

Goldman Sachs upgraded Sanderson Farms to Buy from Hold and raised the price target to $139 (14.3% upside potential) from $127 on attractive valuation. Shares have lost 31% this year. The stock is up about 2% in pre-market trading.

Goldman analyst Adam Samuelson said an “increasingly attractive valuation for SAFM in light of near-term poultry market expectations that have already been reset lower, while our above-consensus FY21 EPS estimate suggests a return to a more normalized operating environment in the year ahead.”

In late-August, Sanderson Farms (SAFM) delivered upbeat 3Q results (ending July 31), benefiting from increased demand by retail grocery store customers. The poultry producer reported adjusted earnings of $1.48 per share, which surpassed Street estimates of $0.95 per share. Its revenues of $956.5 million also exceeded the consensus estimate of $936 million.

However, Sanderson’s 3Q earnings fell 38.6% year-over-year, due to pandemic-led restaurant closures, which severely dented its food-service business. (See SAFM stock analysis on TipRanks).

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 4 Buys and 3 Holds. The average price target of $141.60 implies upside potential of about 16.4% to current levels.

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