Goldman Sachs analysts analyst Adam Samuelson advised clients that he can no longer remain bullish on Tyson Foods ( NYSE: TSN ) after Q1 results revealed profitability issues.
“Fundamentally, results revealed a sharp deterioration in profitability across the organization, most notably in Chicken, that undermines our confidence that the cumulative effect of recent operational and strategic changes could sustainability improve margins and earnings for the company,” he told clients. “With cyclical headwinds from declining cattle availability only set to increase in FY24-25 and further weigh on Beef profitability, in our view, sustained profitability improvement in Chicken, and to a lesser extent Prepared Foods, were critical to our prior positive thesis.”
Samuelson indicated that those critical pillars of the bull thesis are no longer sturdy after the earnings release. Expected deterioration in beef and pork also surprised Samuelson in terms of the magnitude of organic sales declines from the prior year.
Samuelson cut his price target to $66 from a prior $91 alongside a downgrade to Neutral from Buy.
Read Tyson Foods’ earnings call transcript .
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Tyson Foods cut to Neutral as Goldman sees stalled turnaround