Shares of Cal-Maine Foods Inc. dropped 3.0% toward a 14-month low in afternoon trading Wednesday, after BofA Securities analyst Peter Galbo swung to bearish from bullish on the egg producer and distributor, citing the negative impact of higher feed costs. Galbo double downgraded the stock to underperform from buy, and cut his price target to $38 from $47. “We expects higher feed costs for hens (corn/soybean meal) to overpower industry egg pricing over the next 12 months, which should result in negative estimate revisions and likely keep shares range bound,” Galbo wrote in a note to clients. He cut his fiscal 2022 per-share outlook to a loss of 1 cent from a profit of 70 cents. “While we generally see higher feed costs as a positive governor on supply growth for all poultry related products, we note that egg industry prices are not experiencing the same industry lift as chicken, which has seen rising prices in light of [quick-service restaurant] chicken sandwich wars to offset higher feed costs,” Galbo wrote. The stock, which is on track to close at the lowest price since the post-pandemic lows seen in March 2020, has lost 6.5% year to date, while the S&P 500 has gained 11.8%.

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