Analyst Kenneth Zaslow also increased his price target on shares of the Greeley, Colorado-based poultry company to $36 a share from $31.
In a note to investors, Zaslow cited management's implementation of a "successful execution" of its chicken strategy.
"We base our upgrade on our view that an underlying fundamental recovery coupled with internal actions should create an acceleration in earnings power," Zaslow wrote.
He also pointed to the improvement in "underlying chicken fundamentals" around the shortage of U.S. beef production, record high levels in China hog prices, and a "more normal" promotional activity that includes increased features with McDonald's (MCD - Get Report) upcoming chicken promotion, which is its first in more than a year.
Zaslow also noted that it is "no longer a question of if, but when" African Swine Flu will affect U.S. protein prices.
"In our view, ASF likely will elevate chicken operating environment, though the impact likely will be in 2020," he wrote. "China hog prices have hit record levels of 23.49 kg (up 70+% YTD) given a 32% decline in hog and
Pilgrim's Pride sells both fresh and packaged chicken products. Earlier this month, the company reported second-quarter net sales of $2.84 billion, up slightly from a year ago, and net income of $170 million, with adjusted earnings coming to 69 cents a share.
Among other things, the company noted that it experienced a strong market recovery in Mexico. In addition, Zazlow said Pilgrim's Pride "has begun to gain momentum in its European operation, as it continues to implement pricing, execute its Key Customer strategy, and realize synergy opportunities."
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