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Brasil Foods holds pole position in the meat sector for 2012 (BRFS, JBSAY)

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Banco Fator released a new report considering Brazil to be one of the key stories in the "animal protein" sector this year and choosing Brasil Foods ( BRFSquote ) as their top pick above rival JBS ( JBSAYquote ).

According to the analysts, in 2012, meat market leadership will depend on the segment in which each company operates and respective strategy.

Particularly in Brazil, Banco Fator highlights, the competitive advantages existing in chicken production should determine "a strong growth in revenue, with a potential increase in the operating margins."

As far as analysts Renato Prado and Ronaldo Kasinsky are concerned, BRFS will continue to lead the sector thanks to "its exposure to the domestic market and the predominance of chicken protein" in its product mix.

They also highlight the cash generation potential from operating synergies after Brazilian anti-trust regulator Cade finally approved the creation of BRFS from former rivals Perdigao and Sadia.

Banco Fator rates BRFS a "buy" at a price target of BRL 43.27, which gives the stock an upside potential of approximately 19%.

However, the analysts point out some risks to the sector: the international economic deceleration impact; price volatility of corn and soybean; and currency appreciation.

As for the peers, Banco Fator's recommendation for JBSAY remains "hold" with a price target of BRL 6.73.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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