NEW YORK — Credit Suisse on July 18 lowered its target price for Chicago-based Archer Daniels Midland Co. (ADM) to $42, down from $44 per share. The ratings agency also lowered its 2019 earnings-per-share estimate to $3.10, which compares with a consensus of $3.25.
Credit Suisse said ADM was plagued by several factors during the second quarter.
“Consistent with our tracking data, management confirmed that ethanol margins worsened in 2Q due to rising corn costs,” Credit Suisse noted. “Similar to Cargill, the trade dispute with China and the unfavorable weather in the U.S. (which hurt barge results) negatively impacted the Origination division. Management indicated that the Financial division experienced higher-than-normal insurance claims from customers related to flooding.
“On the positive side, oilseed crush margins and global demand for soymeal remains favorable, but still below last year’s unusually strong results.”
Credit Suisse said the slow start to fiscal 2019, coupled with uncertainty surrounding the China trade situation and the loss of livestock to African swine fever, is likely to lead ADM to pull back on its guidance for e.p.s.
ADM is scheduled to release second-quarter financial results on Aug. 1.