Piper Sandler downgraded two food companies today

on May 3, 2022
  • Piper Sandler downgraded Tyson Foods and Kellogg Company on Tuesday.
  • Analyst Michael Lavery sees 10% and 8.0% downside in TSN and K, respectively.
  • Both food companies are set to report quarterly results in the coming days.

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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%

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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

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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:

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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 5th. The stock is up 4.0% for the year.


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