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Increased poultry production gives analyst jitters about Tyson
Story Date: 8/29/2013
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Source: Tom Johnston, MEATINGPLACE, 8/28/13
Concerns over poultry supply indicators had Bank of America equity analyst Ryan Oksenhendler a little less confident in Tyson Foods stock, according to media reports published early this week.
Oksenhendler downgraded the company’s rating from “buy” to “neutral” and lowered the price target a dollar to $32, citing increased pullet placements and egg sets.
Shares of Tyson were trading Monday afternoon at $29.17, down $2.31 per share following the downgrade.
Pullet placements increased 8 percent year-on-year in July after a 3 percent increase in June, which Oksenhendler contends will “result in a significant increase in production in the spring and summer 2014” and shows a diversion from the seasonal fall cuts that correspond with demand declines.
Egg sets, he notes, have increased 5 percent year-over-year in the past two weeks and have averaged a 3.5 percent year-on-year increase over the last 10 weeks.
“While chicken producers are expected to benefit from a significant decrease in grain costs following a large US harvest, the increased production will weigh on pricing and limit upside to margins, in our view,” the analyst wrote in a note to investors, as quoted by media reports.
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