BMO Capital analyst Andrew Strelzik maintained a Hold rating on Tyson Foods (TSN – Research Report) today and set a price target of $46.00.
Andrew Strelzik has given his Hold rating due to a combination of factors revolving around Tyson Foods. He highlights that while Tyson’s fourth quarter earnings per share (EPS) for the fiscal year 2023 outperformed consensus forecasts, the company’s guidance for fiscal year 2024 is below consensus. This implies a lower EPS, which is discouraging despite the current undervaluation of Tyson’s cyclical business and its reasonable valuation on normal EPS. Strelzik believes it’s too early to be confident due to the lack of clear catalysts that could significantly improve earnings over the next two years.
Strelzik also notes that Tyson Foods is likely to face earnings limitations in the medium term. This expectation stems from the anticipated decline in Beef margins up until fiscal year 2025, given industry capacity constraints. Additionally, the report points out that Tyson’s ability to counter supply pressure with greater value-added capabilities is limited. Furthermore, Tyson’s Pork business is expected to break even, placing it in a more challenging position compared to its peers. Lastly, despite a seemingly strong outlook for Prepared Foods, Strelzik suggests potential risks from possible consumer spending pressures and increased competitive pricing pressures.
Strelzik covers the Consumer Cyclical sector, focusing on stocks such as Brinker International, Darden, and Domino’s Pizza. According to TipRanks, Strelzik has an average return of 3.6% and a 56.68% success rate on recommended stocks.
In another report released yesterday, Goldman Sachs also maintained a Hold rating on the stock with a $45.00 price target.
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Tyson Foods (TSN) Company Description:
Founded in 1935 and based in Arkansas, Tyson Foods, Inc. is a food company, which is engaged in the production of processed food. It operates through the following segments: Chicken, Beef, Pork, and Prepared Foods.
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