On Wednesday, BMO Capital Markets adjusted its outlook on Tyson Foods Inc (NYSE:TSN) shares, increasing the price target from $60.00 to $62.00. The firm has maintained its Market Perform rating on the stock. This revision follows Tyson's financial results for the fourth fiscal quarter of 2024, where earnings per share (EPS) of $0.92 surpassed the consensus estimate of $0.70.
The better-than-expected performance was attributed to robust results in the Chicken and Beef segments, which helped to counterbalance weaker results in Pork and International divisions, although Prepared Foods met expectations.
Tyson Foods also provided its initial guidance for the fiscal year 2025, projecting an EPS in the range of approximately $3.00 to $3.90, with the consensus being $3.50. The guidance is primarily driven by the strength in the Chicken segment and increased productivity in Prepared Foods. In response, BMO Capital has revised its EPS estimates upward to reflect the near-term margin strength in Chicken and the productivity improvements in Prepared Foods.
Despite the positive developments, BMO Capital reiterated its Market Perform rating on Tyson shares. The analyst's commentary highlighted that while Tyson continues to enhance its internal operations, the journey to normalized earnings, with an EPS of $6.00 to $7.00, appears to be protracted.
Moreover, the analyst noted that there is ongoing risk to industry chicken margins beyond the first fiscal quarter of 2025. Tyson's recent performance and forward-looking guidance have prompted BMO Capital to adjust its target price, reflecting a cautiously optimistic view of the company's near-term prospects.
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