By Dhirendra Tripathi
Investing.com – Tyson Foods, Inc. (NYSE:TSN) stock traded 1.4% lower Monday after BMO Capital downgraded it to ‘market perform’ while cutting the target to $99.
The new target is 14% lower than the previous one of $115.
“Our downgrade does not reflect a change in our long-term view of Tyson’s ability to affect internal change through its actions, operational improvements, or capacity expansions, but rather our disciplined approach and a potential reduction to underlying fundamentals outside chicken, particularly beef,” BMO analyst Kenneth Zaslow said in a note.
Zaslow expects lower beef packer margins to offset the improvement in the chicken business.
Tyson is up 16% in the last year compared to just 6.6% gains in S&P 500.
A report in The Wall Street Journal earlier this month said the Justice Department is investigating whether poultry companies are engaged in anticompetitive sharing about employment practices that capped plant workers’ wages.
The probe covers rivals like Pilgrims Pride (NASDAQ:PPC) and Sanderson Farms (NASDAQ:SAFM) as well. Workers at meat plants have alleged that their employers conspired to exchange compensation data to hold down employee wages.
The maker of Jimmy Dean sausages expects current year sales of $50 billion at the midpoint, more than its August estimate of $46.5 billion at the center of the range. It expects volume growth of 2% to 3%.