Tyson Foods stock dips as meat inventories outweigh demand

Tyson Food shares fell on Monday over concerns of high inventory outweighing demand.

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[AUDIO LOGO]

- And now, there's no natural segue for this that I can think of, but Tyson!

- If you find it, you're my hero, buddy.

- Chat GPT, we're going to get Chat GPT on this. Tyson is knifing, testing some of the lowest levels in price since 2020, also having its worst day since, guess what, last quarter. Much like then, its margins are in focus as volatile commodity prices make pricing a challenge. And you can see that is a max chart on your screen going back to the 1980s, quite the top in there. Now Consumer Edge is noting that the beef segment-- in particular flagging the elevated cattle prices and also the feed for pork, that's getting expensive as well. An analyst does say, quote, "it's pricing power at retail has been made clear along with efficiency and capacity levers to pull." So a little bit more there in coming quarter. Now Consumer Edge rates the stock overweight with a $90 price target.

Stephens, another firm, still likes the stock, keeping it an overweight and saying earnings likely have now troughed. So the bottom, perhaps, in, but the analyst is reviewing the price target due to a lack of near-term catalysts. And the stock is still interesting to long-duration investors. I'll just quickly say, Staples great play last year, as we experienced the worst year for 60-40 in probably our generation and many generations. Not necessarily so this year, so maybe a different strategy for investors.

- Yeah, you mentioned the margins also, concern for them being that their data finds that consumers are spending less on those pricier cuts of meat, and I was really surprised to see the price of beef down 8.5% in the same quarter last year while chicken's--

- I'm bidding it up.

- --up 7%. So complete opposite directions. You're what?

- I'm bidding up the price of beef.

- Oh, you're a big beef eater?

- I'm getting as much-- I am, and now we have a Whole Foods--

- I know.

- --in the Financial District. Jared and I run into each other at the Whole Foods all the time.

- No place else.

- It's worth it. [LAUGHS]

- Tyson Buffalo Tenders, that's my tip, guys.

- Well, I--

- They're underrated.

- You know what I thought was interesting? Is that the prepared foods was the only business segment to show an increase in operating income, and you have to wonder if that's maybe a trend that we'll see throughout this year, consumers gravitating towards those more convenience items amid inflation. We saw that during the pandemic, maybe in the future.

- Makes sense.

- Yes. Unfortunately--

- I know I do. I like the convenience frozen foods--

- I cannot resist them,

- --all the time.

- Ally, thank you for playing with us today.