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Why Wall Street Is Bullish on Tyson Foods Stock

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Oct. 5 2018, Updated 9:52 a.m. ET

Analysts see a strong upside in TSN stock

Most of the Wall Street analysts covering Tyson Foods (TSN) stock maintain a “buy” rating, despite the near-term headwinds from retaliatory trade tariffs by China and Mexico and oversupply. Among the 16 analysts providing the recommendations on TSN stock, ten analysts suggest a “buy,” five analysts maintain a “hold” rating, and one analyst has a “sell” recommendation.

Analysts have a target price of $70.87 per share on TSN stock, which indicates a potential upside of 19.9% based on its closing price of $59.13 on October 3.

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What’s behind the optimism?

Tyson Foods (TSN) stock is down 27.1% year-to-date, as retaliatory tariffs are expected to hurt its near-term exports. Due to the lower exports, the supply of pork and beef in the domestic market is outpacing demand, leading to lower pricing and adversely impacting the demand for alternatives such as chicken.

Barring near-term headwinds, analysts expect Tyson Foods to benefit from the higher demand for protein-rich foods. The company’s focus on portfolio optimization through the divestiture on non-protein brands and the acquisition of fast-growing brands is expected to support sales.

The company’s Prepared Foods segment is growing at a healthy rate, benefiting from its acquired brands. Tyson Foods acquired Keystone Foods, which is expected to strengthen its Prepared Foods segment.

Overall, Tyson Foods has a strong portfolio that’s expected to drive its sales and EPS growth rate in the long run. However, its financials are expected to remain challenged in the near term.

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