Protein Stocks Are Lacking Power

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To our vast vegan day trader audience, divert your attention away from this article. Jefferies released a note Tuesday morning highlighting the protein sector. The theme was how traders could play the recent sell off.

Why was there a selloff in the protein sector? Well, Jefferies says the recent rally in grain prices, such as soybean meal and corn, up 56 percent and 17 percent over the past three months, combined with pork processing spreads down 60-65 percent since start of the year, can be attributed to the 10 percent protein stock slide.

They believe this slide is an opportunity to buy shares of Tyson Foods, Inc TSN, but remain cautious with an Underperform rating as Jefferies still sees downside in the stock. While there is some potential downside to shares of Hormel Foods Corp HRL, they are not quite as bearish as they are on Sanderson Farms, Inc SAFM, which is their 'top and only Underperform'.

Jefferies, noting that processing margins may not come back down, readjusted their price targets for Hormel Foods to $34and Tyson Foods to $70.

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Posted In: Analyst ColorReiterationAnalyst RatingsJefferies
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