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Tyson Foods Investors Should Be Happy, Stephens Analyst Says

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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:

  1. The better-than-expected F2Q15 results
  2. Lower Prepared Foods input costs in F2H15 due to falling pork
  3. Higher Prepared Foods synergies
  4. Lower Pork earnings due to West Coast port issues
  5. 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

Mar 2017ArgusDowngradesBuyHold
Dec 2016KeyBancInitiates Coverage OnOverweight
Nov 2016Credit SuisseMaintainsNeutral

View More Analyst Ratings for TSN
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Posted-In: StephensAnalyst Color Reiteration Analyst Ratings


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