On Tuesday, BMO Capital Markets adjusted its outlook on shares of Tyson Foods , Inc. (NYSE:TSN), increasing the price target to $60 from the previous $58. The firm maintains a Market Perform rating on the stock, following Tyson's financial performance update for the third fiscal quarter of 2024.
Tyson Foods reported earnings per share (EPS) of $0.87 for the third fiscal quarter, surpassing the consensus expectation of $0.67. This beat was attributed to stronger profits in the Chicken, International, and Pork segments, which helped mitigate larger losses in the Beef division.
The company also revised its operating profit guidance upward for the fiscal year 2024, signaling a potential slowdown in profits for the fourth fiscal quarter, with EPS likely to fall below consensus estimates.
The revised guidance for the fourth fiscal quarter suggests that the consensus may be too optimistic about the Beef segment's performance in fiscal year 2025. In response to the latest financial data, BMO Capital Markets made slight adjustments to its EPS forecasts for fiscal years 2024 and 2025, leading to the increased price target.
Despite the positive adjustments, BMO Capital Markets reiterated its Market Perform rating for Tyson Foods. The analyst pointed out that while Tyson has shown improved execution and favorable chicken market fundamentals, the company's earnings outlook is still constrained by ongoing pressures in the Beef industry. The firm's outlook reflects a cautious stance on Tyson's future earnings potential amid these industry challenges.
InvestingPro Insights
In light of Tyson Foods, Inc.'s (NYSE:TSN) recent earnings report and the subsequent analysis by BMO Capital Markets, current data from InvestingPro provides additional context for investors. Tyson's market capitalization stands at $22.24 billion, underscoring its significant presence in the industry.
Despite a slight decrease in revenue growth over the last twelve months as of Q3 2024, by -0.33%, the company's dividend yield remains attractive at 3.14%, reflecting a commitment to returning value to shareholders. This is further supported by the company's track record of raising its dividend for 10 consecutive years.
Investors should note that Tyson Foods is trading near its 52-week high, with the price at 97.82% of this peak. This aligns with the positive earnings per share (EPS) surprise for Q3 2024, which may have contributed to the stock's momentum.
Moreover, InvestingPro Tips indicate that analysts have revised their earnings upwards for the upcoming period, suggesting a favorable outlook on Tyson's financial performance. However, it's important to be aware that the company's gross profit margins are currently weak at 6.27%, which could be a point of concern for the long-term sustainability of profits.
For those looking to delve deeper into Tyson Foods' financial health, the InvestingPro platform offers additional insights and tips—there are 11 more InvestingPro Tips available, which can help investors make more informed decisions. The current fair value estimates from analysts and InvestingPro stand at $63 and $66.48 respectively, providing a benchmark for potential investment value.
Overall, the data and insights from InvestingPro complement the analysis provided by BMO Capital Markets, offering a broader picture of Tyson Foods' financial landscape and future prospects.
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