Benzinga | May 26, 2021 04:24PM EDT

BofA Downgrades Cal-Maine Foods On Medium-Term Risks

Cal-Maine Foods Inc's (NASDAQ:CALM) stock may remain range-bound over the next 12 months, with negative estimate revisions due to higher feed costs for hens overpowering industry egg pricing, according to BofA Securities.

The Cal-Maine Foods Analyst: Peter Galbo downgraded the rating for Cal-Maine Foods from Buy to Underperform, while lowering the price target from $47 to $38.

The Cal-Maine Foods Thesis: The company's feed costs could surge from 48 cents per dozen to 52.5 cents per dozen, Galbo said in the downgrade note.

"We are lowering our FY22 EPS from $0.70 to a loss of ($0.01) to reflect these changes, which is also below consensus estimates of $1.03," he added.

"We also note that CALM is unlikely to pay a dividend post 4Q21 (declared in 4Q, paid in 1Q22) through FY22 as the company maintains a variable dividend policy and we are now forecasting net income losses in 1H22," the analyst wrote.

CALM Price Action: Shares of Cal-Maine Foods had declined by 3.43% to $34.92 at the time of publication Wednesday.

(Photo: Jon Sailer via Unsplash)