Jefferies analyst, Akshay Jagdale, reiterated his Buy rating on shares of Tyson (NYSE: TSN) but cut his price target to $75 after the stock underperformed the S&P since September (%) due to the 4Q miss & rotation out of staples.

The analyst believes the 4Q miss was caused by transitory/company-specific factors and the LT thesis, predicated on the company’s value-added growth strategy, remains intact. At 11.5x the analyst's NTM EPS estimate, he believes the market is significantly undervaluing TSN’s value-added earnings and the company presents one of the best M&A optionality profiles in the space.

The PT of $75 (down from $85) is derived by discounting a FY20, $93 valuation over 2.86 years (i.e. one year forward) at a rate of 8%. However there are risks: 1) material increases in grain costs; 2) potential execution risk related to the integration of HSH; and 3) potential supply disruptions related to animal disease or natural disasters.

For an analyst ratings summary and ratings history on Tyson click here. For more ratings news on Tyson click here.

Shares of Tyson closed at $57.60 yesterday.