Tyson Foods, Inc (NYSE:TSN) loses muscle on BAC report
In a report that was published on Monday, Ryan Oksenhendler, the BAC analyst downgraded Tyson Foods, Inc (NYSE:TSN) from a “buy” to “neutral” rating and the price target was lowered from $33.00 to $32.00. The Bank of America noted in a report that in their view, this will most probably result in the industry-margins to peak sooner than was expected.
Very recently, supply indicators such as pullet-placements , which is the 9 month indicator and egg sets, which is the 10-week indicator have risen faster than what was expected. In July, pullet placement rose by 8% year-on-year which came on the heels of the 4% rise that took place in June. This will lead to a notable rise in production in the spring as well as in the summer of 2014.
No seasonal changes
It does not seem like the industry is making any seasonal-cuts for the fall. This is the time when there is a drop in demand. Egg sets have risen 5% year-over-year over the past two weeks and there has been an average rise of 3.5% year-over-year over the past 10 weeks. It is projected that chicken producers will benefit from the sizeable dip in grain prices post the massive U.S harvest. However, BAC feels that the rise in production will definitely weigh on the pricing and limit the upside to margins.
In Monday’s trading session, TSN dipped 7.34%. The opening price of the shares was $30.85 which touched an intraday high of $30.89 and closed at $29.17. More than 11.29 million shares exchanged hands in Monday’s trading session while the average volume of shares traded over the past 30 days was 3.82 million. The company has a market cap of $10.27 billion. Tyson Foods is a meat protein and food production company and operates independently as well as via its many subsidiaries.