Get 40% Off
🚨 Volatile Markets? Find Hidden Gems for Serious OutperformanceFind Stocks Now

Tyson Foods upgraded to neutral, price target raised to $62

Published 07/02/2024, 02:10 am
Updated 07/02/2024, 02:10 am
© Reuters.

On Tuesday, BofA Securities adjusted its stance on Tyson Foods , Inc. (NYSE:TSN), moving its rating from Underperform to Neutral. The firm also increased the price target for Tyson's stock to $62.00, up from the previous target of $47.00.

The revision follows Tyson's first-quarter performance, which prompted the analyst to reevaluate the company's stock based on approximately 13 times the projected earnings per share for fiscal year 2026. This adjustment represents a shift from the previous valuation that was based on 13 times the calendar year 2025 earnings per share estimate.

The initial downgrade to Underperform occurred in November 2022, amid concerns about challenging conditions in the Beef and Chicken segments, which were expected to pose obstacles for both the company's share performance and earnings. However, since then, Tyson Foods has experienced a notable improvement in its Chicken segment's fundamentals and execution. Additionally, positive developments in the Pork segment and strong earnings and execution in Prepared Foods, particularly through foodservice share gains, contributed to better-than-anticipated results in the first quarter.

Despite these positive trends, the analyst noted that the Beef segment continues to present challenges and may do so for an extended period. The firm pointed out that until there is a significant change in the Beef cycle, it is difficult to anticipate considerable further increases in earnings per share or the stock's valuation multiple.

Investors are currently expected to base their valuations on a price-to-earnings ratio of around 13 times, which is considered the mid-cycle and average multiple from 2000 to 2022, applied to an estimated mid-cycle earnings per share of approximately $5, achievable, in the analyst's view, by calendar year 2026.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

InvestingPro Insights

In light of BofA Securities' recent upgrade of Tyson Foods, Inc. (NYSE:TSN) from Underperform to Neutral and the increase in their price target to $62.00, current and prospective investors may find additional insights from InvestingPro valuable. Tyson Foods has shown a strong commitment to shareholder returns, as evidenced by a decade of consecutive dividend increases. The company's dividend has been maintained for 50 consecutive years, highlighting its stability and reliability as an income stock. This is particularly compelling for investors seeking steady income streams.

Analysts are optimistic about Tyson Foods' future, with net income expected to grow this year and five analysts revising their earnings upwards for the upcoming period. This suggests that the company's financial health may be on an upward trajectory despite the challenges faced in the Beef segment.

From the real-time data available on InvestingPro, Tyson Foods presents a mixed financial picture. The company's market cap stands at $20.32 billion, with a price-to-book ratio over the last twelve months as of Q4 2023 at 1.13, indicating a potentially undervalued stock compared to its book value. However, investors should note the high price-to-earnings (P/E) ratio for the same period at 273.26, which could suggest overvaluation based on earnings.

For those looking to delve deeper into Tyson Foods' financials and future prospects, there are additional InvestingPro Tips available. To explore further and make well-informed investment decisions, use coupon code "SFY24" to get an additional 10% off a 2-year InvestingPro+ subscription, or "SFY241" to get an additional 10% off a 1-year InvestingPro+ subscription. With these subscriptions, investors can access a comprehensive list of 11 additional tips on Tyson Foods at https://www.investing.com/pro/TSN.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.