Cal-Maine Foods: Strategic Shift to Specialty Eggs and Growth Opportunities Drive Buy RatingWe initiate coverage of Cal-Maine Foods (CALM) with a Buy rating and $100 price target. While the Cal-Maine name is well-known, we believe 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. Between this mix shift, an expansion into prepared offerings and a commodity egg business shifting from market-based to contract-based pricing, we see a positive step change in earnings power, a reduced exposure to commodity egg cycle volatility and improved long-term growth visibility. ► Shift? – Over the past decade, the egg industry has shifted dramatically from legacy caged operations to specialty egg systems.