ADM Archer Daniels Midland Company

We recently downgraded our recommendation on Archer Daniels Midland (ADM) to Underperform following a lower-than- expected fourth-quarter 2011 results. ADM's quarterly earnings of $0.58 per share missed the Zacks Consensus Estimate of $0.84 and dropped almost 16% from the prior-year quarter, primarily due to a higher income tax rate.

Although, ADM is expanding its global footprint into key agriculture regions through acquisitions and joint ventures, the resourcing of commodities and stringent external finance 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 the financials of the company.

Our long-term Underperform recommendation on the stock indicates that it would perform below the broader market. Our target price of $25.00, 7.8x 2012 EPS, reflects this view.
 
ARCHER DANIELS (ADM): Free Stock Analysis Report
 
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