UPDATE: BMO Capital Markets Upgrades Tyson Foods to Outperform Rating, Raises PT

In a report published Friday, BMO Capital Markets upgraded its rating on Tyson Foods (NYSE: TSN) from Market Perform to Outperform, and raised its price target from $20.00 to $27.00.

BMO Capital Markets noted, “First, Cargill's announced closure of its Plainview, TX beef processing facility (2-3% of industry capacity) is a “game changer.” TSN's beef business outlook materially improves, while its risk profile is greatly reduced (i.e. recall the $60/head improvement in 2008 with TSN's closure of Emporia). Second, as evidenced by Cargill's commentary, TSN should continue to expand its relative performance in beef given its regional presence in the North. Third, pork packer margins likely will reach a nadir in February and rebound solidly through 2013 reflecting industry discipline, pork's relative value to beef, US's higher share of the global export market, and sufficient hog supplies. Fourth, TSN's significant structural improvements, including $1 billion in cost savings since FY2008, coupled with moderating losses in its international chicken operation provide confidence in TSN's ability to outperform industry chicken margins. Fifth, TSN remains committed to returning cash to shareholders through its share repurchase program.”

Tyson Foods closed on Thursday at $21.23.

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