) to neutral from outperform.
Analyst David Nelson says Dean Foods cut the $2.21 to $2.26 2004 earnings per share forecast to $2.00 to $2.05. He downgraded as Dean's ability to manage and maintain dairy margins -- a key thesis behind his outperform rating -- is now in more serious question.
Nelson notes his outperform rating was predicated on Dean's strength in distribution helping to provide pricing (if not margin) power in what is a commoditized category -- dairy. He says Dean's inability to manage through what is admittedly unprecedented volatility raises these concerns. He cut the $2.22 2004 earnings per share estimate to $2.01 and cut the $2.42 2005 estimate to $2.21. He cut the $40 target to $33.