Analyst Actions: Pilgrim's Pride, MetLife

From Standard & Poor's Equity Research

MERRILL CUTS PILGRIM'S PRIDE TO UNDERPERFORM

Merrill Lynch analyst Diane Geissler says she is downgrading Pilgrim's Pride (PPC) to underperform from buy. She widens $3.25 fiscal year 2008 (September) loss estimate to $4.22 loss, which assumes fourth quarter mark-to-market hedging loss above $75 million, which is a size she thinks necessary to violate the company's Fixed Charge Coverage Ratio financial covenant. She sees $2.07 fiscal year 2009 EPS.

Geissler notes that the shares have been incredibly weak recently, but sees little possibility of price appreciation until the company gets its financial house in order. She believes the company will be able to negotiate a temporary waiver of the covenant, and remain a going concern, but she thinks market will begin to value PPC on replacement-costs basis.

She cuts $28.00 price objective to $5.50.

CITIGROUP REITERATES BUY ON METLIFE

Citigroup analyst Colin Devine says that within the financial services industry that may increasingly differentiate between "winners" and "losers," he looks for MetLife (MET) to remain a clear-cut leader.

Devine says MET's diversified business mix, strong capital position, and conservative investment portfolio should allow it to produce stable predictable earnings while delivering steady improvement in ROE up to 15% level by yearend 2010. He notes recent Tokyo analyst meeting reconfirmed high growth potential of international insurance businesses.

He thinks MET's dominant U.S. life insurance franchise, rapidly growing presence in Asia, strong credit ratings and balance sheet would support it making aggressive offer for AIG (AIG).

He has a $70 target price on the stock.