ADRs in Focus: Perdigao declines after downgrade

U.S.-traded shares of Perdigao SA declined on Monday after an analyst downgraded the Brazilian meat and dairy producer, saying he is concerned about the profitability of its dairy segment.

ADRs of Perdigao fell $1.17, or 2 percent, to $56.17 after hitting an intraday low of $55.57 earlier in the session. ADRs, or American Depositary Receipts, are securities that allow U.S. investors to trade shares of companies based overseas.

Citi Investment Research analyst Carlos Albanol downgraded Perdigao to "Hold" from "Buy," saying performance at the company's dairy operations have weakened as Brazilian milk prices have declined.

Milk prices have remained low, he said, since mid 2007, when several cases of milk contamination were reported. Meanwhile, the cost of milk collection has continued to climb.

He expected Perdigao to continue to report weaker margins when it reports its second-quarter earnings. It is scheduled to do so in July, according to Thomson Financial.

A Perdigao representative could not immediately be reached for comment Monday afternoon.

Separately, Albanol reiterated his "Buy" rating on rival food producer Sadia SA and raised his target price on Brazil-traded shares, citing its better-than-expected first-quarter results and a more favorable exchange rate against the dollar.

ADRs of Sadia declined 47 cents, or 2.1 percent, to $22.21.

Other Latin American food producers were mixed in afternoon trading. Argentina's Cresud Inc. lost 12 cents to $14.93. Gruma SAB de CV, also based in Mexico, rose 5 cents to $10.80, and Mexico's Industrias Bachoco SAB de CV added 8 cents to $30.13.

The Bank of New York Latin America ADR Index rose 0.93 points to 452.81. The Bank of New York Composite ADR Index added 0.33 points to 168.64 as U.S. markets were mixed.