Why is Tyson Foods (TSN) Stock Down Today?

On Monday, shares of chicken producer and marketer Tyson Foods Inc. TSN are down over 3.5% in afternoon trading after BMO Capital Markets downgraded its stock on a valuation call.

The firm reduced its rating on TSN stock to “Market Perform” from “Outperform,” as well as lowering its price target to $69 from $78. BMO analysts said that the "overarching view" on Tyson Foods remains intact, but the "case for aggressively investing in TSN is less persuasive at current valuations and as expectations continue to build despite a surge in feed costs particularly soybean meal."

BMO Capital also warned investors that they should stay away from the company because of higher feed costs and valuation. Tyson Foods’ is unlikely to grow much in the near future as any earnings per share growth this fiscal year will be driven by non-operating items, analysts continued.

"The greatest risks to our downgrade are that TSN continues to exceed expectations and the market rewards TSN with a higher valuation reflecting its greater earnings power from its chicken business transformation, momentum in prepared foods, and recovery in beef packer margins," BMO analysts added in a note.

Tyson Foods stock is up 18.5% this year as of Friday’s close.

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