rofits and margins have been pressed at Smithfield, the largest U.S. hog and pork producer, as it faces soaring grain and fuel prices. While analysts say the beginning of a turnaround might be in sight, they say a full recovery could take until mid 2009 or into 2010, reports Reuters.

"The company is facing a hugely challenging environment," Credit Suisse food analyst Robert Moskow wrote in a note to clients this week. "Investors with a two-year horizon might start looking at this stock again as a deep value play, but investors with six to 12 months can wait longer."

Smithfield's stock has lost more than 40 percent of its value this year, and last week Standard & Poor's Rating Services downgraded Smithfield's corporate credit rating two notches to BB- because of "weak credit metrics" that were not expected to rebound in the near future.

Smithfield, which is part of a joint venture that also produces Butterball brand turkeys, is in the process of selling its beef and cattle feeding operations to Brazilian meat company JBS SA JBSS3.SA. That deal, which is expected to bring in $565 million, is awaiting approval by U.S. regulators.

Last week, the head of the Senate's antitrust subcommittee urged the Justice Department to block the purchase. The company had hoped to get the sale approved by June and now is aiming for September.

"Perhaps we should look at the equity deals as expensive insurance in case the beef sale to JBS gets delayed further or if fundamentals deteriorate beyond management's expectations," Moskow said in the client note.

View the Reuters story by clicking here.