Tyson Foods ( NYSE: TSN ) shares fell sharply on Monday as analysts questioned 2023 guidance after a mixed Q4 report.
The Arkansas-based protein producer reported record sales and earnings for the full 2022 fiscal year , but bookended the year with lower than expected EPS. While price hikes in chicken and strong demand for beef aided stronger than expected revenue for the quarter, slowing sales volume in pork tempered enthusiasm as well.
Moving forward, the company anticipates $53.28B in sales, above the analyst expectations of $52.89B. On this front, analysts were divided in terms of levels of confidence in that forecast.
“We are a bit challenged at this time to understand how, in a year whe chicken prices likely will be down by a great degree and consumers will continue to trade down, 3-7% sales growth is reasonable,” JP Morgan analyst Ken Goldman wrote on Monday. “All in, clearly Q4 and 2023 are worse than anticipated; however the buy side was already more pessimistic than the sell side on this story, so downside in the share price may be limited.”
Barclays’ analysts also noted the cautious guidance on operating margins, wherein beef adjusted operating margin is slated to be in the lower end of a 5% to 7% range, suggesting a disappointment against the consensus estimate of 6.72%. Additionally, pork adjusted operating margin slated to range from 2% to 4% also fell short of the 4.97% expectation.
Both analysts joined the bulk of the Street in rating the stock at Hold. Per SeekingAlpha surveys, 8 sell-side analysts rate the stock at Hold, 5 rate it a Buy, and 1 rates it at Sell.
However, Stephens told clients that the guidance suggests “higher quality earnings” in 2023 and sets the stock up for more upside. As such, he reiterated a Buy rating as he projects cost savings programs and operational efficiencies aiding results in the future.
Shares of Tyson Foods ( TSN ) fell 3.53% shortly before the market close on Monday.
Elsewhere, aside from the financial forecasts, CFO John Tyson appeared on the company’s earnings call only days after his arrest .
“I'm embarrassed and I want to let you know that I take full responsibility for my actions. I also want to apologize to our investors as I have to our employees,” he told analysts on Monday. “This was an incident inconsistent with our company values as well as my personal values. I just wanted you guys to hear this directly from me and to know that I'm committed to making sure this never happens again.”
Read the earnings call transcript .
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Tyson Foods margin guidance raises analyst suspicion