Tyson Foods shares are down 28.8% YTD. Should I invest?

By: Stanko Iliev
Stanko Iliev
Stanko dedicates himself to providing investors with relevant information they can use to make investment decisions. He loves the… read more.
on Dec 28, 2020
  • Tyson Foods looks like a good value investment
  • Piper Sandler analyst Michael Lavery has upgraded this stock to $77 from $70
  • JPMorgan lowered its price target on Tyson Foods to $70, which is still above the current price

Tyson Foods (NYSE: TSN) shares have weakened from $91 below $43 since the beginning of January 2020, and the current price stands around $64. The company’s business has proven resilient throughout the pandemic, and shares of this company look like a good value investment.

Fundamental analysis: Tyson Foods is facing the current covid crisis relatively well

Tyson Foods is an American multinational corporation that is the world’s second-largest processor and marketer of chicken, beef, and pork after JBS. Tyson Foods shares have weakened more than 28% since the beginning of the 2020 year, and according to analysts, this stock could be a very good investment option.

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The company’s business has proven resilient throughout the pandemic, with sales roughly flat, and Tyson Foods looks like a good value investment. Management of the company has forecasted $330 million of direct incremental costs related to COVID for the 2021 fiscal year, but with a 2.7% dividend yield, this stock remains attractive for traders and for income investors.

 JPMorgan lowered its price target on Tyson Foods to $70, but this is still above the stock’s current price. JPMorgan assigned a neutral rating on Tyson Foods but also mentioned that this stock has been one of the better ones in their coverage lately.

“Our annual EPS estimates are more-or-less static, and our price target falls by $2 to $70 to reflect our increased concerns about EBITDA growth. Although we continue to believe that TSN will benefit from improved away-from-home eating trends in FY21, we now view the risk/reward in the shares as balanced,” said analyst Ken Goldman from JPMorgan.

On the other side, side Piper Sandler analyst Michael Lavery has upgraded this stock to $77 from $70 on hopes that the vaccine will help lift foodservice sales.

The company’s revenue had increased in the 2020 fiscal year to $43.18B from 42.40B in 2019, and the growth projects will ensure that the numbers will be moving up in the future. It is also important to mention that the 2020 fiscal year’s net income was $2.14B while the net income in the 2019 fiscal year was $2.02B.

There are also some apparent risks when it comes to investing in Tyson Foods shares, but with the market capitalization of $23B, this company is still undervalued relative to its competition.

Technical analysis: $70 represents a strong resistance level

Data source: tradingview.com

The critical support levels are $60 and $55; $70 and $80 represent the resistance levels. If the price jumps above $70, it would be a signal to buy Tyson Foods shares, and the next target could be around $75.

On the other side, if the price falls below the $60 support level, we have the open way to $55 or even $50.

Summary

Tyson Foods is facing the current covid crisis relatively well, and this company looks like a good value investment. JPMorgan lowered its price target on Tyson Foods to $70, which is still above the current price, while Piper Sandler has upgraded this stock to $77.

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