Demand For Cal-Maine Foods' Nutritionally Enhanced Offerings Goes Flat

D.A. Davidson maintains an Underperform rating on Cal-Maine Foods Inc (NASDAQ: CALM) and lowered its price target from $37 to $35.

Analyst Eric Gottlieb based his decision on low EPS reported by Cal-Maine of -$0.64, which didn't meet D.A. Davidson's estimate of -$0.45 or the consensus of -$0.33.

Moreover, Cal-Maine sales were down 60.7 percent from last year at $239.8 million.

"The company is in the midst of an unwinnable situation brought on by a poor supply and demand balance," stated Gottlieb.

Related Link: Investors Punish Cal-Maine Foods For Delivering Higher-Than-Expected Q1 Loss

Per-bird production rates are near all-time highs, the analyst explained. Although retail demand is still up with the low prices, the demand in food service for specialty eggs is weak.

According to Gottlieb, food service demand is likely to stay low, as many companies switched products to incorporate fewer eggs or egg substitutes when prices were high.

Cal-Maine has suspended its dividend until the -$0.65 EPS is recouped, according to the analyst, this likely won't occur until fiscal year 2018.

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