Pilgrim’s Pride Shares Soar as Chicken Regains Its Popularity

(Bloomberg) -- Chicken is back, and its renewed popularity is boosting the shares of producer Pilgrim's Pride Corp.

More Americans are buying poultry at the supermarket, and more restaurants are adding chicken sandwiches to their menus. That's led to the company being “short to tight” on supplies that are ready for the meat cases at grocery stores, Jayson Penn, chief executive officer of Pilgrim's Pride, told analysts on a call Thursday. The Greeley, Colorado-based company reported earnings that beat the highest estimate after markets closed Wednesday.

The stock rose 7.1% to $28.97 at 11:42 a.m. in New York, and earlier jumped as much as 8.1%, the most since May 2018. The company's controlling shareholder JBS SA gained as much as 9% in Sao Paulo trading.

Chicken is having a moment thanks to its relative cheapness compared with other proteins. That's helped Pilgrim's shares surge more than 80% this year, while Tyson Foods Inc. -- the larger rival which also makes beef and pork -- has trailed with a gain of about 50%. Meanwhile, U.S.-Mexico trade tensions have limited the Latin American country's ham imports, boosting demand for poultry from Pilgrim's.

The chicken industry is increasing capacity, and output will be 2% to 3% higher next year, Penn said. Meanwhile, pork and beef expansions are slowing, with some reductions seen in 2020. Spreads for pork and beef prices compared with boneless chicken breast at retail have been increasing, he said.

“In total protein availability, I think it's going to be a great year for chicken,” he said.

The number of promotions for chicken at fast food restaurants is 20% higher than 2018, year-to-date, Penn said, adding that grocery-store features for the meat are up as much as 6%. These promotions will continue through the third and fourth quarters, he said, and restaurants will be doing more chicken-focused limited-time offers.

“There's going to be more sandwich features, and we believe that trend is going to continue,” Penn said.

Pilgrim's Pride Gets Surprise Trade War Boost for Chicken Demand

In Mexico, trade tensions have driven retail pork prices to record highs, so more consumers in the country are also choosing chicken.

“We think poultry is poised to become the fastest growing protein around the world,” Arun Sundaram, an analyst at CFRA Research, said in a note.

To contact the reporter on this story: Lydia Mulvany in Chicago at lmulvany2@bloomberg.net

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Millie Munshi, Patrick McKiernan

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