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Investing.com -- Bernstein downgraded Tyson Foods (NYSE:TSN) to Market-Perform from Outperform, warning of continued headwinds in the company’s beef segment and limited upside in its chicken business ahead of third-quarter results.
The brokerage lowered its price target to $59 from $74, citing reduced EBITDA forecasts and a lower valuation multiple.
Bernstein said profitability remains the central concern, especially in beef, where supply constraints, disease risks, and trade uncertainties are weighing on margins.
Tyson’s beef margins are expected to remain negative in the near term. EBIT margins are expected to be between -1.5% and -1.0% for the quarter, a slight improvement from consensus of -2.6%.
Still, cattle supplies remain historically tight, with heifer slaughter rates too high to support herd rebuilding. Additional pressure has emerged from the spread of New World screwworms, which has led to repeated closures of the U.S.-Mexico cattle import corridor, a key supply source.
Bernstein also flagged policy risks, including scrutiny of Australian beef imports under the Trump administration, which may further limit supply flexibility.
In chicken, performance remains solid but may be nearing a ceiling. Bernstein said recent gains, driven by plant closures, better genetics, and improved forecasting, may have pushed the vertically integrated segment to peak margins.
While demand is healthy, management has signaled limited pricing power due to chicken’s role as a lower-cost protein.
Pork margins remain under pressure from higher hog costs, while Prepared Foods faces input cost inflation despite recent operational improvements.
Bernstein warned the broader protein industry faces structural and policy uncertainties, and that Tyson’s near-term margin outlook remains fragile despite some tailwinds in chicken and efficiency initiatives in Prepared Foods.