Ahead of the Bell: JPMorgan downgrades ConAgra

An analyst at JPMorgan on Wednesday downgraded ConAgra shares to "Neutral" from "Overweight" and removed a $26 price target, based on the company's decision to lower guidance on Tuesday.

Analyst Terry Bivens said the company's change to its profit estimate suggested more "fundamental weakness than we expected."

ConAgra said Tuesday that its per-share profit in the first quarter of 2009 would fall short of its earlier guidance of 26 cents to 29 cents. The company blamed its lowered outlook on higher-than-expected cost inflation.

"Our concern is that the warning comes a mere nine weeks after the previous guidance and at a time when ConAgra has achieved significantly higher pricing with its retail customers," Bivens wrote in a note to investors.

The analyst said further downward revisions seem likely, given that the company was reviewing its full-year earnings outlook.

Bivens lowered JPMorgan's estimate for full-year 2009 earnings per share to $1.52 from a previous expectation of $1.56.

Analysts polled by Thomson Financial expect 2009 earnings per share to be $1.57, on average.

Bivens noted that the company has "substantial" share buybacks planned that could boost the shares.

Shares closed Tuesday at $21.46. They have traded between $18.85 and $27.16 in the past 52 weeks.