Tyson Foods Investors Should Be Happy, Stephens Analyst Says
In a report published Tuesday, Stephens analyst Farha Aslam maintained an Overweight rating on Tyson Foods, Inc. (NYSE: TSN), with a price target of $50, after the company reported a strong quarter.
Tyson Foods' share price rise 1-2 percent after the company reported its F2Q15 results. The company reported its EPS at $0.75, up from $0.60 in F2Q14, and beating the Stephens and consensus estimates. The earnings upside was driven by the performance of the Prepared Foods and Pork segment.
Tyson Foods raised the 3-year synergy target on the acquisition of Hillshire Brands Co (NYSE: HSH) from $500 million to $600 million, as the integration is running smoothly and ahead of schedule.
The EPS estimate for FY15 has been raised from $3.45 to $3.55 to reflect:
- The better-than-expected F2Q15 results
- Lower Prepared Foods input costs in F2H15 due to falling pork
- Higher Prepared Foods synergies
- Lower Pork earnings due to West Coast port issues
- Lower Poultry earnings due to softening leg quarter pricing
The EPS estimate for FY15 has been raised from $3.75 to $3.90 mainly to reflect $400 million of cost synergies associated with the Hillshire purchase.
"We believe shares of TSN are poised to perform well in F2H15 and in F2016 execution on Hillshire synergy targets, a solid operating backdrop in Chicken, a solid outlook on Pork and improving fundamentals in Beef. The Company's annual free cash flow of over $1 billion should generate additional earnings growth in F2016 from deleveraging, M&A and/or share repurchases," Aslam added.
Latest Ratings for TSN
|Dec 2016||KeyBanc||Initiates Coverage On||Overweight|
|Nov 2016||Credit Suisse||Maintains||Neutral|
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