Benchmark starts Cal-Maine Foods at Buy, sees ‘step change in earnings power’

As previously reported, Benchmark initiated coverage of Cal-Maine Foods (CALM) with a Buy rating and $100 price target While the Cal-Maine name is well-known, the firm believes its valuation is “over-indexed to its legacy as a commodity producer” and discounts sweeping changes throughout the egg category and Cal-Maine’s subsequent mix shift to more valuable specialty production. This mix shift, an expansion into prepared offerings and a commodity egg business shifting from market-based to contract-based pricing all add up to what the firm sees as “a positive step change in earnings power” and improved long-term growth visibility, the analyst tells investors.