Most analysts recommend a “buy”
Most of the analysts providing recommendations on Tyson Foods (TSN) maintained a positive stance on the stock. The company’s top line is expected to grow in coming quarters driven by higher volumes. Strong demand for beef, pork, and chicken both in the local and international markets is projected to drive its sales higher. Meanwhile, an anticipated rise in the average selling price could also drive sales growth in coming quarters.
Also, the company’s bottom line could grow on the back of strong volumes and benefits from restructuring initiatives aimed at streamlining its operations and lowering costs. However, increased business investments are expected to hurt margins and in turn, the company’s profitability.
Rating summary and target price
About 63.0% of analysts provided a “buy” rating on Tyson Foods stock. 31.0% recommended a “hold,” and 6.0% of the 16 analysts rated it a “sell.” Moreover, analysts suggest a target price of $77.27 per share on TSN stock, which represents a potential upside of 7.1% to the closing price of $72.18 on November 6, 2017. In comparison, the majority of analysts have a neutral outlook on Hormel Foods (HRL), Sanderson Farms (SAFM), and Pilgrim’s Pride (PPC) stocks.
Tyson Foods stock looks attractive on the valuation front. The company’s stock was trading at a forward PE multiple of 12.9x as of November 6, 2017, which is well below the S&P 500 Index’s (SPX-INDEX) forward PE ratio of 18.5x. Moreover, the company’s long-term EPS growth rate remains strong, driven by higher volumes and a focus on cost reduction.