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Published May 11, 2015, 03:18 PM

Cal-Maine Foods hits record high as brokerage raises price target

Egg supplier Cal-Maine Foods Inc's shares touched a record high on Monday, after theflyonthewall.com said research firm Sidoti & Co raised its price target on the stock, citing better egg pricing power following a shortage of birds after an outbreak of avian influenza in the United States.

By: Staff Report, Reuters

Egg supplier Cal-Maine Foods Inc's shares touched a record high on Monday, after theflyonthewall.com said research firm Sidoti & Co raised its price target on the stock, citing better egg pricing power following a shortage of birds after an outbreak of avian influenza in the United States.

The outbreak has resulted in nearly 28 million birds being quarantined, presenting Cal-Maine with an opportunity to grow its higher-margin egg-breaking operations, Sidoti & Co analysts wrote in a note, raising their price target to $67 from $51.

BB&T analysts also believe that flock culling could support a spike in egg prices.

Cal-Maine's shares rose as much as 17.8 percent to a record high of $50.69, with more than 2.6 million shares traded by 3:45 pm E.T, over double the stock's 10-day moving average.

The United States is undergoing its worst-ever outbreak of avian flu. The disease has spread across 14 states in five months, affecting about 24 million birds so far, mostly egg-laying hens and turkeys, according to the U.S. Department of Agriculture.

Economic ripples from the outbreak are being felt across numerous sectors, from food companies seeing a squeeze on egg supplies to meat processors flooded with excess poultry products amid export market bans.

Many investors are betting against Cal-Maine's stock, with short interest on nearly 16 percent of the company's outstanding shares.

Of the two brokerages covering the stock, one has a "strong buy" rating and one rates it "hold". The median price target is $44.25, according to Thomson Reuters data.

Cal-Maine's shares were up 14.6 percent at $49.35 in late afternoon trading on Monday. Up to Friday's close, the stock had risen 10 percent this year.

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