Source:  Rita Jane Gabbett, MEATINGPLACE.COM, 8/10/10

Two Wall Street analysts raised their earnings estimates for Tyson Foods after the company reported a strong third fiscal quarter despite market concerns about Russia, grain prices and poultry production expansion.

Stephens Inc. analyst Farha Aslam raised her fiscal 2010 earnings per share forecast for Tyson to $2.03 per share from $2.00, reflecting the strong third quarter, which she said was only partially offset by a more conservative estimate for poultry profitability given recent trade issues with Russia continuing to delay shipments.

“We believe that Russia will likely get worked out in the next few weeks and will be a catalyst for poultry prices,” she wrote in a note to investors, adding, “Should Russian shipments resume ahead of September, Tyson is well positioned to exceed our estimate.”

For fiscal 2011, Aslam boosted her earnings forecast to $1.90 per share, up from $1.85.

“Lower interest expense due to lower debt levels given the repurchase of bonds is the key for our higher earnings estimate,” she wrote.

J.P.Morgan analyst Ken Goldman also raised his earnings per share estimate for fiscal 2011 to $1.90, also reflecting lower interest expense. Goldman had previously pegged 2011 earnings at $1.52 per share.

His optimism was guarded, however, noting that Wall Street is assigning lower multiples to protein stocks in general these days, adding, “We believe that too many issues remain uncertain for us to harness a more positive tone.”

Tyson executives presented an optimistic view on a teleconference following yesterday’s earnings report. They projected the impact of higher chicken production could be somewhat offset by lower domestic availability of substitute proteins and that good corn and soybean conditions should bring feed costs down from recent highs. They were also hopeful that foodservice demand would not drop further and said they expect exports to rise.

For more stories, go to www.meatingplace.com.