Annie's drops after announcing frozen pizza recall

theflyonthewall.com

Organic food maker Annie's (BNNY) is retreating after the company announced last night that it had initiated a voluntary recall of its Annie's Homegrown Frozen Pizza due to the possible presence of metal fragments in the product. Annie's noted in an SEC filing last night that there have been no consumer complaints, illnesses or injuries associated with the product so far, and that it expects to record costs associated with the recall in its third quarter ended December 31, 2012. The company added that it also expects to incur some costs in future quarters, but noted that it could recover some funds from its insurance and third party suppliers. Annie's also provided third quarter revenue guidance prior to recall costs of approximately $37M, versus analysts' consensus estimate of $36.84M. In a note to investors earlier today, JPMorgan analyst Ken Goldman recommended buying Annie's stock on any significant weakness today. Usually the fears associated with food product recalls are worse than reality, according to Goldman. Moreover, after speaking with Annie's management, the analyst is confident that the company's sales trends in products other than pizza are very strong. Goldman reiterated an Overweight rating on the shares but reduced his target on the stock to $45 from $50 to reflect lower valuations for natural food makers. In early trading, Annie's slumped $1.70, or 4.42%, to $36.77.

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