Tyson Gets Bernstein Downgrade Amid Plant Closures

Bernstein analysts act because of 'near-term uncertainty around [Tyson's] ability to maintain production levels amidst plant closures and worker absenteeism.'
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Shares of Tyson Foods  (TSN) - Get Report fell Friday after Bernstein analysts downgraded the stock to market perform from outperform because of the meat processor's woes in the wake of the coronavirus epidemic.

They also lowered their share-price target for the country’s biggest meat producer to $65 from $88.

“We are downgrading Tyson given increased near-term uncertainty around the company's ability to maintain production levels amidst plant closures and worker absenteeism,” the analysts, led by Alexia Howard, wrote in a report.

Just Thursday, Tyson announced it was shutting its beef facility in Pasco, Washington, while employees get tested for Covid-19. The plant produced enough beef to feed 4 million people per day, Tyson said. It also closed two of its biggest pork plants this week.

As for the Bernstein analysts, “while we continue to expect African Swine Fever-led upside over the medium term, we believe that it is prudent to downgrade the stock in the interim,” they said.

Production capacity will likely suffer from the coronavirus in the third quarter. “And there could be further downside, as it is difficult to contain the spread of the virus in highly labor-intensive meat plants,” the analysts said.

“While the protein shortage in the near term could result in margin upside as TSN benefits from the wider gap between lean hog and cattle prices and wholesale prices for pork and beef, Tyson's ability to benefit from such margin upside remains highly uncertain,” the analysts said.

Tyson stock recently traded at $58.99, down 3.14%. It has sunk 33% in the last three months.