Tyson Foods Stock Trading Around Fair Value, Analyst Upgrades Stock To Neutral

Company Performance - Tyson Foods Inc. has been upgraded from Underweight to Neutral by Piper Sandler analyst Michael Lavery, maintaining a price forecast of $58 [1] - The company reported a Chicken EBIT margin of 9.1% in the first quarter, exceeding the analyst's forecast of 6.5%, marking its best quarter since Q2 FY2018 [1] - Tyson achieved a Chicken order fill rate of over 98%, attributed to improved scheduling and execution aligning production with demand [1] Operational Improvements - Tyson Foods has reduced waste in its plants, with both retail and food service segments expanding, particularly in its value-added portfolio [2] - The company reintroduced fully cooked products in retail during the first quarter [2] Future Outlook - The analyst forecasts a Chicken EBIT margin of 7.4% for FY25, although feed cost benefits are expected to diminish in later quarters [2] - The outlook for future quarters remains uncertain despite expectations of solid EBIT for the second and third quarters [6] - The FY25 EPS estimate has been raised from$ 3.45 to $3.93, while FY26 EPS remains at$ 4.55 [6] Market Dynamics - Cattle supply is limited with narrow price spreads, but prices remain high due to stronger-than-expected consumer demand [3] - Potential heifer retention increase may benefit long-term herd rebuilding but could reduce near-term supply and pressure margins [3] Tariff Implications - On February 1, 2025, a 25% tariff on imports from Canada and Mexico was announced, effective February 4, 2025, but has been postponed for a month to address the fentanyl trade [3][4] - Tyson Foods exports a limited amount of chicken products to Canada and approximately 2.5% of its pork sales to Mexico, while also importing feeder cows and hogs from Canada [5] - The company is prepared to adjust to any tariffs with contingency plans to pivot to other markets quickly [5]