Zacks Investment Research downgraded shares of Archer Daniels Midland company (ADM) from NEUTRAL to UNDERPERFORM on August 23, 2012, with a target price of $24.00.
Based on the disappointing fourth quarter 2012 results, we have downgraded our long-term recommendation on Archer Daniels to Underperform. The company's quarterly earnings fell approximately 45% year over year to $0.38 per share, missing the Zacks Consensus Estimate of $0.62 primarily due to weak segmental performance. Its segmental operating profits were negatively impacted by tight U.S. crop supplies, negative ethanol margins and weak results in cocoa and other. Although Archer Daniels is expanding its global footprint in the key agricultural regions through acquisitions and joint ventures, but we believe sourcing of commodities and stringent credit facilities may pose a threat to its operating performance. Moreover, intense competition and adverse currency fluctuations may undermine the company's long-term initiatives and dampen its financial results.
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