Growing demand for meat will boost this stock, Mizuho says
Tyson Foods has room to run as consumer appetites for animal proteins grows despite increasing meat prices, according to Mizuho. The bank initiated coverage of Tyson with an outperform rating. It also set a $72 price target on shares, implying 17% upside from Wednesday’s close. “We believe TSN is poised to benefit from the structural growth of protein demand,” analyst John Baumgartner said Thursday in a note to clients. “U.S. meat demand is a record despite record high prices, and food culture, shifting in favor of nutrient-dense foods and animal protein, should persist in a world of GLP-1 and personalized health data.” Over the next decade, meat consumption is expected to grow by 47.9 million tonnes, an Organisation for Economic Co-operation and Development report showed. Meanwhile, red meat and poultry production could hit 108.4 billion pounds by the end of 2026, representing an increase of 1% from the previous year, according to the The United States Department of Agriculture. To be sure, beef prices rose about 15% last year, and geopolitical tensions could push the prices of other meats higher as well, analysts said. But Mizuho expects demand for meat to remain strong, benefiting Tyson. “We expect meat will remain an integral nutrient, including annual per capita chicken demand growth of at least +1% and premium innovation across the complex; superior to center-store food (2-yr avg. volume -1% and increasing pressure on prices),” Baumgartner wrote. Tyson is also prepared to meet rising demand for meat due to its push to invest in updating various aspects of its operations to make them more efficient, according to Mizuho. “The last five years of heavy reinvestment, to enhance supply chain and network optimization and establish robotics and enhanced analytics, underwrites stronger execution and greater operating leverage,” Baumgartner wrote. Mizuho’s call goes against consensus on Wall Street. Of the 15 analysts covering Tyson, just five have a buy or strong buy on shares. Ten shops on the Street have a hold rating on the stock. Tyson shares have risen 5% this year, outperforming the market. However, the stock is flat over the past 12 months.