On Wednesday, Tyson Foods Inc. (NYSE: NYSE:TSN) received an updated price target from Piper Sandler, increasing it to $58.00 from the previous $50.00. Despite the price target hike, the firm maintained its Underweight rating on the stock. The adjustment followed Tyson's fiscal fourth quarter of 2024 earnings, which surpassed expectations due to better-than-anticipated margins in its Beef and Chicken segments.
Tyson's earnings performance was notably bolstered by its Beef and Chicken operations. However, the analyst from Piper Sandler expressed concerns about the near-term outlook for cattle costs, which are expected to worsen before improving. This could pose a downside risk to the current beef pricing, which has been unusually favorable. For fiscal year 2025, Tyson's Beef EBIT guidance does not seem to account for the anticipated tighter cattle supply.
Furthermore, market indicators suggest that chicken pricing could face downward pressure due to an increase in market supply. Tyson anticipates unlocking some earnings before interest and taxes (EBIT) in its Chicken segment for fiscal year 2025 through additional capacity and improvements in product mix. The company also expects a positive volume in both Chicken and Prepared Foods segments for the fiscal year, although Prepared Foods' volume has seen a decline since 2019.
Piper Sandler's analysis reaffirms its fiscal year 2025 earnings per share (EPS) estimate for Tyson at $3.45 and projects an EPS of $4.55 for fiscal year 2026. The raised price target to $58.00 is now based on the firm's calendar year 2026 earnings estimate. Tyson's financial results and the market's response to the updated price target will continue to be monitored by investors and industry observers.
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