NEW YORK (AP) — Shares of Dean Foods Co. tumbled on Monday as an analyst lowered his rating for the country's largest dairy company partly because it is being hurt by rising feed costs and hot weather.
THE SPARK: Amit Sharma of BMO Capital Markets cut Dean Foods to "Market Perform" from "Outperform."
THE ANALYSIS: In a client note, the analyst said that the unusually warm weather and escalating feed costs are pushing raw milk prices higher at a quicker-than-expected pace.
There is also concern that Supervalu Inc.'s decision to be more aggressive to lower prices will see other supermarket operators do the same. Sharma says this makes it more likely that there will be more milk promotions.
The analyst reaffirmed a $16 price target.
SHARE ACTION: Dean Foods' stock slid 89 cents, or 6.1 percent, to $13.63 in afternoon trading. The shares have traded between $7.83 and $17.25 over the past year. The stock is up 27 percent for the year to date.