Inflation is evidently weighing on the food space now and for, Piper Sandler, it was reason enough to downgrade both Tyson Foods Inc ( NYSE: TSN ) and Kellogg Company ( NYSE: K ) on Tuesday.
Analyst warns Tyson Foods could slide another 10%
In a note this morning, analyst Michael Lavery downgraded Tyson Foods to “underweight” with a price target of $81 that represents a 10% downside from here. Previously, he had a PT of $87 on the stock.
TSN is expected to report its Q2 results next week. Lavery sees inflation a headwind for the Springdale-headquartered company as it could continue to push consumers into cutting back on meat. The analyst wrote:
Over 60% have begun buying less of a grocery category because of inflation, 48% of whom have been cutting back on meat. While TSN has exposure to many parts of the value chain, consumer downtrading would have a negative effect on revenue and margin mix.
Lavery sees downside to $62 in Kellogg Company
In a separate note, the Piper Sandler analyst also downgraded Kellogg Company on Tuesday to “underweight” and said the stock could slide another 8.0% from here to $62 a share.
Lavery agreed that cereal sales weren’t under pressure for now, but said the American multinational hadn’t yet fully recovered from 2021 disruptions. He wrote:
Kellogg lacks better current momentum, following disruptions from its 2021 strike at a time when it looks likely to face accelerated downtrading, which could potentially make it harder to regain share.
Kellogg is scheduled to report its Q1 results on May 5 th . The stock is up 4.0% for the year.
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