SAO PAULO, May 15 (Reuters) - Shares of Brazil's JBS SA

rose 7% in early morning trading on Wednesday after

the world's largest meatpacker reported strong first-quarter

results in spite of headwinds faced by its large U.S. beef

business.

JBS executives said they continue to see reduced cattle

availability in the United States and demand constrained by

higher beef prices in its biggest market. At the same time, JBS

is positive on the outlook for its chicken export business as

demand is heating up globally and grain prices have subsided.

The company's U.S. pork division is, however, benefiting

from a shift in consumer demand for pork in place of beef, the

company said. In Brazil, a combination of leaner manufacturing

processes and lower feed prices bolstered the company's Seara

processed foods division, it added.

"JBS' diversification is now playing its role," said BTG

analysts in a note to clients, referring to the fact the firm

owns plants in multiple countries and sells different types of

protein.

BTG said it believes JBS' Pilgrim's Pride, its U.S.

pork business and Australian operations "should all be direct

beneficiaries of the downturn in the U.S. cattle cycle", adding

that Brazilian operations are also benefiting from stronger

cyclical fundamentals.

BTG said JBS offers the "best risk-reward in the sector" and

has a "buy" recommendation on the stock.

Addressing analysts, JBS CFO Guilherme Cavalcanti said the

company is de-leveraging faster than it had anticipated. He said

that if the company reports margins of 7.5% for 2024, it is

possible for its net-debt-to-EBITDA ratio to fall to 2.5x from a

current 3.7x by year-end.

Reducing leverage at the current pace allows JBS to consider

paying dividends and evaluate acquisition opportunities,

Cavalcanti said in answer to a question about options for

capital allocation.

The priority, however, is retaining JBS' investment grade

status, Cavalcanti noted.