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Goldman Removes Tyson Foods From Its Conviction Buy List, Still Sees 17% Upside

Tyson Foods, Inc. NYSE:TSN - Goldman Removes Tyson Foods From Its Conviction Buy List, Still Sees 17% Upside

Tyson Foods, Inc. TSN 0.15% shares have appreciated 67 percent over the past 12 months, as compared to the 2 percent decline in the S&P.

Goldman Sachs’ Adam Samuelson maintains a Buy rating on the company, with a price target of $80.

Upside Potential

While removing Tyson Foods from Goldman Sachs’ "Americas Conviction List," Samuelson stated that the stock has 17 percent upside potential.

“However, we recognize that the next leg of outperformance will likely be dependent on greater investor confidence in F17 margins/EPS growth that will be less visible in coming months, that no longer makes it a top idea across Industrials & Materials,” the analyst mentioned.

Maintaining a positive view on Tyson Foods, Samuelson acknowledged that expectations for the company had moved higher, following the consecutive beat and raise stock outperformance. However, the risk/reward appeared favorable at the current levels.

Valuation Gap Will Narrow

“We think that execution momentum, particularly in chicken, has narrowed the gap between our prior bull case FY17 EPS of $5 and the base case, which is not yet fully reflected in consensus of $4.58,” Samuelson pointed out.

The analyst expects the valuation gap between Tyson Foods and its key packaged food peers would narrow as the company delivers despite the EPS and margin hurdles and proves that its new portfolio and strategy are sustainable.

DateFirmActionFromTo
Apr 2016Argus ResearchInitiates Coverage onBuy
Apr 2016CLSADowngradesBuyOutperform
Mar 2016BB&T CapitalDowngradesBuyHold

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