Tyson Foods (TSN) Upgraded at Piper Sandler Despite Soft Demand

Tyson Foods (NYSE: TSN) shares were upgraded to Neutral from Underweight by Piper Sandler on Tuesday, with a price target of $79 per share maintained.

The upgrade follows the company's earnings report on Monday, where it missed earnings estimates but topped revenue expectations. Shares fell 8.4% following the report.

Piper Sandler's research analyst Michael Lavery said in a note to clients that they continue to "recognize risks from consumers downtrading (both within meat and to other alternatives), and there remains risks to F23 Beef margins from short cattle supplies (as F22 herd liquidation pulls supply forward)."

"Consumer demand for pork is also surprisingly soft, in part from historically high prices and a stronger dollar weighing on exports," wrote Lavery.

"However, these risks now appear more fully reflected in current valuation, and we are raising our rating from UW to Neutral. Our $79 price target on ~11x C23E remains unchanged. We lower our F22E EPS from $8.80 to $8.75 (driven by the miss vs. our estimates in F3Q22), and we lower our F23E EPS from $7.25 to $7.10, driven by lower Beef and Pork margin estimates, partially offset by a slightly lower tax rate assumption and lower share count)," he added.

By Sam Boughedda

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