Sector Snap: Pork Producers Dip On Swine Flu Fears

Analysts were split on how the outbreak would affect specific meat producers, but cautioned that companies would do well to pay attention to shopper fears.

"We remain very cautious about the outlook for the consumption of pork in the United States given that this tends to be more of a psychological issue at first (people may react in shock to the headline and not eat pork)," said Akshay Jagdale of KeyBanc Capital Markets.

Deutsche Bank analyst Christina McGlone said areas such as Tyson's prepared foods business and Hormel's pork-based grocery and refrigerated items will likely see lower consumption.

Smithfield will likely be among the hardest hit by the outbreak, said McGlone, "owing to its vertical integration as hog prices will fall."

But Ken Goldman of JPMorgan was confident Smithfield will produce strong margins once it gets past near-term difficulties.

He maintained an "Overweight" rating and lifted the Smithfield, Va.-based company's price target to $14 from $12, but said it was "somewhat of a technicality as we are much more confident in the long-term direction of the shares than the magnitude of the change."