Bernstein SocGen Group Reiterates Outperform Rating on Tyson (TSN)

Bernstein SocGen Group analyst Alexia Howard reiterated an Outperform rating and $74.00 price target on Tyson (NYSE: TSN).

The analyst commented: "We recently conducted a virtual fireside chat with Dr. Josh Maples, an Associate Professor of Agricultural Economics at Mississippi State. Dr Maples is a leading academic expert on the beef industry, and our conversation focused on the outlook for its cyclical recovery.

The first key takeaway is that Dr. Maples expects a slow, rational re-expansion of the beef cattle herd, likely starting in 2026 with 2025 fairly flat. We currently seem to be in limbo between a holding pattern and the early signs of a herd re-expansion. High interest rates are a deterrent to herd expansion, as farmers cannot justify paying 9 - 12% interest rates over two years to buy a heifer for breeding (they are more used to 5 - 7%). The main difference between the last cycle and this one is that there are relatively few heifers available on feedlots that could be brought back into the breeding supply. This optionality around heifer use allowed the herd to grow rapidly last time around. This time, many farmers are also somewhat gun shy as the herd expanded too quickly in 2015 and destroyed cattle prices.

Reciprocal tariffs could tamp down exports of pork to Mexico, which could in turn put downward pressure on chicken and beef prices in the U.S., and exports of beef to China have effectively stalled. Another tail risk worth monitoring is the Northward migration of the New World Screw Worm from Mexico: This has temporarily closed the border for live cattle migration from Mexico into the U.S. which could reduce feedlot cattle by ~5% in the U.S., and which already seems to be pushing live cattle prices up, which could pressure beef processor margins."

For an analyst ratings summary and ratings history on Tyson click here. For more ratings news on Tyson click here.

Shares of Tyson closed at $56.16 yesterday.

You May Also Be Interested In