Two Wall Street analysts are upbeat about Smithfield Foods in light of improving fresh pork margins, reports The positive outlook, however, is tempered by lingering concerns that sow slaughter is still not happening fast enough.

Stephens Inc. analyst Farha Aslam improved her fiscal 2010 earnings forecast for the company "largely due to improving fresh pork margins and lower projected corporate expenses," she wrote in a note to investors. Her fiscal 2010 forecast is a loss of 95 cents per share. Aslam increased her fiscal 2011 earnings forecast by a penny to a profit of $1.10 per share.

Aslam noted pork margins have significantly improved since the beginning of July, which she estimates will average $9.24 per head in the quarter ending in October compared to a loss of 40 cents per head in the quarter that ended in July.  She also noted the pork cutout has increased by 8.8 percent since mid-August, buoyed by stronger ham and belly prices.

Wall Street analysts are concerned that sow slaughter still seems weaker than hoped for. "We're sticking with Smithfield, but it's impossible to time the move," wrote J.P.Morgan analyst Ken Goldman in a note to investors. "We continue to believe the risk/reward for Smithfield is outstanding and that the stock will work as soon as the breeding herd falls in earnest."

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