Bullish indicating open at $55-$60, IPO prices at $37
On Monday, BofA Securities announced the initiation of coverage on Smithfield Foods (NASDAQ:SFD), assigning the stock a Buy rating and setting a price target of $28.00, representing a 33% upside from the current trading price of $21.10. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value assessment. The new coverage comes as Smithfield Foods, a leading player in the pork industry, prepares to return to trading in the U.S. market.
Peter Galbo of BofA Securities highlighted the company’s strong position in the industry, noting that Smithfield Foods is the largest vertically integrated U.S. hog producer, with an annual production of approximately 14.5 million hogs. The company also holds the number one share in the fresh pork processing market, at about 23%, and is a significant player in the packaged meats sector with well-known brands such as Smithfield, Nathan’s Famous, and Eckrich.
The analyst’s optimistic outlook is based on a sum-of-the-parts valuation approach, applying a 7.8x blended enterprise value to EBITDA multiple for the year 2026. InvestingPro data shows the company currently trades at an EV/EBITDA multiple of 9.6x, with last twelve months EBITDA of $1.1 billion. This method reflects the company’s expected financial performance and market position in the coming years.
Smithfield Foods is re-entering the U.S. stock market following its 2013 buyout by WH Group (OTC:WHGLY) of Hong Kong, which still retains a majority ownership of approximately 93%. According to BofA Securities, Smithfield Foods’ superior financial profile compared to its closest peers is likely to lead to an increase in its stock multiple over the next year. This view is supported by InvestingPro’s analysis, which assigns the company a "GOOD" overall financial health score of 2.8 out of 5, with particularly strong marks in price momentum and relative value metrics.
In other recent news, Smithfield Foods has completed its initial public offering (IPO), marking its return to public markets after nearly a decade of private ownership. The IPO involved the sale of over 26 million shares at $20.00 per share, resulting in net proceeds of approximately $234.1 million for the company. In conjunction with the IPO, Smithfield amended its corporate governance documents and introduced new compensation plans aimed at aligning its growth strategy and incentivizing employees through stock ownership.
Additionally, Barclays (LON:BARC) initiated coverage on Smithfield Foods with an Overweight rating and set a price target of $28.00. Barclays’ positive outlook is based on the favorable macroeconomic environment for the pork industry and Smithfield’s strategic initiatives to enhance its supply chain and product portfolio. The firm anticipates that Smithfield will continue to benefit from strong profitability and consistent sales growth in the pork sector. Barclays also noted Smithfield’s decision to reduce internal hog production, which is expected to decrease earnings volatility and free up funds for potential mergers and acquisitions. These developments highlight Smithfield’s strategic moves to strengthen its market position and financial performance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.