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Tuesday, Citi analysts adjusted their outlook on Tyson Foods , Inc. (NYSE:TSN), reducing the price target to $61.00 from $63.00, while retaining a Neutral rating on the shares. According to InvestingPro data, the stock appears undervalued, with technical indicators suggesting oversold conditions. The revision comes ahead of the company's expected fiscal first quarter 2025 earnings report, set to be released on Monday, February 3.
Citi anticipates a slight earnings per share (EPS) beat for Tyson's fiscal first quarter, which ended in December. The firm's projections are based on the potential for increased profitability in the Chicken segment due to favorable pricing and feed savings. With current gross profit margins at 7.42%, as reported by InvestingPro, margin improvement remains crucial. This is likely to be counterbalanced by weaker performance in other divisions, particularly Beef.
The analysts noted that while investors are largely focused on the potential for declining Chicken margins as 2025 progresses, Citi believes there are more significant earnings risks in Tyson's other segments. The Beef division could face challenges due to a tight cattle supply, which might affect the company's bottom line.
Additionally, the Prepared Foods segment is under scrutiny. Citi's analysis suggests that Tyson's guidance implies a substantial year-over-year improvement and an unusual seasonal pattern, which may present risks to the company's earnings.
Despite these concerns, Citi does not foresee any major changes to Tyson's annual outlook at this juncture. The firm's commentary reflects a cautious stance on the meat producer's financial performance in the near term, particularly as it navigates various market and segment-specific challenges.
With a solid financial health score and 51 consecutive years of dividend payments, Tyson maintains strong fundamentals. Tyson Foods is expected to provide more details on its performance and outlook during the upcoming earnings call. For deeper insights into Tyson's valuation and 8 additional exclusive ProTips, visit InvestingPro.
In other recent news, Tyson Foods Inc. has been the subject of several analysts' attention following robust earnings results. UBS initiated coverage on Tyson Foods with a Neutral rating and a $62.00 price target, citing the company's substantial market presence in the US poultry, beef, and pork markets. The firm forecasts an approximate 8% compound annual growth rate in adjusted operating income for Tyson between 2024-2028, driven by the Chicken and Prepared Foods segments.
However, UBS anticipates potential challenges in the beef segment, maintaining a Neutral stance on Tyson stock. In addition to UBS, Piper Sandler, BMO Capital Markets, and Stephens also adjusted their price targets for Tyson, reflecting strong earnings offset by potential challenges in the beef segment.
Tyson Foods is also making operational adjustments, with the recent announcement of the permanent closure of its meat plant in Emporia, Kansas, affecting over 800 jobs. This closure is part of a series of operational changes by Tyson Foods, which have resulted in significant workforce reductions.
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