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Pilgrim's Pride Corporation (NYSE: PPC) may be playing a game of chicken with authorities, but the commodity is shooting up in value. The price of chicken continues to reach new highs amid increases in feed prices caused by sharp rises in corn, wheat and rice commodities. This bullish outlook on chicken prices prompted an upgrade from Neutral to Outperform by at least one analyst covering the poultry company.

Credit Suisse upgraded Pilgrim's Pride from Neutral to Outperform, citing higher chicken prices on the horizon. Analyst Robert Moskow raised his price target by $7 to $33 per share and predicted that chicken prices would surpass $2 per pound in 2009. However, he cautioned that poultry producers would have to find new ways of offsetting rising costs.

Barron's also projected this week that chicken-breast prices would rise 20 cents to $1.65 per pound this summer. Although the industry needs $1.85 per pound prices to break even, the publication insists that Pilgrim's Pride looks cheap at 7.4x projected 2009 earnings. These comments led to extended gains by meat packing companies today following last week's rally.

Today's news follows a slew of bad news last week. Pilgrim's Pride plants were raided last week by federal immigration agents in a crackdown on an alleged scam to provide fake identificaiton to illegal immigrant workers. More than 100 people are expected to be charged in the aftermath; however, the company has not yet been charged or fined.

Meanwhile, ratings agency Moody's placed Pilgrim's Pride under review for a possible downgrade amid concerns that the comapny may be challenged to meet its bank covenants and maintain adequate liquidity and credit metrics appropriate for its existing rating. This revelation comes amid higher-than-expected feed costs that could become a strain on profitability.

Shares of Pilgrim's Pride rose $1.06, or 4.52%, in early trading.

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