A Citi analyst cut their price target on Bunge (BG) from $130 to $95--a 27% drop. Despite the drop, they maintain a "hold" rating. But, I would take their "ratings" with a grain of salt.
However, their comments do shed some light on the commodities markets in general. Bunge has continually raised earnings estimates, but I question what assumptions those estimates are based off of. Emerging markets while still growing, are decelerating. And despite everything that Bunge does right, they can't escape certain macro-economic factors. Click the link for the analyst's comments.
Citi analyst says, "Given what our Citi (Invtmt Research) Emerging Markets Economist team views as the possible beginnings of a potential slowdown within the emerging markets, we believe that the risk of moderating demand growth has increased and thus future earnings at Bunge could come under pressure...Adding to the risk profile surrounding 2009 earnings at Bunge is the recent decline in commodity prices which has been led by crude oil, which is down approximately -25% from its July peaks. At this point we don't know for sure that events will unfold to reduce commodity demand and thus prices, but the signs seem to be forming, as several of our fellow analysts have reduced their price forecast for different commodities such as our commodities strategy analyst who on Monday reduced his forecast on aluminium, copper, and nickel prices by -10% to -27%, due to concerns of a slowdown in industrial activity."
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