Piper Sandler Downgrades Kellogg And Tyson Foods

Zinger Key Points
  • The analyst says 48% of consumers have been cutting back on meat.
  • He says Kellogg may suffer as consumers switch to cheaper cereal alternatives.

Consumers are cutting back spending, even on basic goods, due to elevated levels of inflation, according to Piper Sandler.

The Tyson Foods Thesis: Analyst Michael Lavery downgraded the rating for Tyson Foods Inc TSN from Neutral to Underweight, while reducing the price target from $87 to $81.

Of the shifting consumer buying habits, meat is most at risk, the analyst said in the downgrade note. He added, “Over 60% have already 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, we believe consumer downtrading would still likely have a negative effect on revenue mix and margin mix,” Lavery wrote.

Also Read: Kellogg Sues British Government Over New Sugar Rules: Reuters

The Kellogg Thesis: In a separate note, analyst Lavery downgraded the rating for Kellogg Company K from Neutral to Underweight, while reducing the price target from $66 to $62.

Although cereal sales “remain elevated” versus historical trends, “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,” the analyst said.

TSN, K Price Action: Shares of Tyson Foods had declined by 3.35% to $89.79, while Kellogg’s stock is down by 0.58% to $66.98 at the time of publication Tuesday, according to Benzinga Pro.

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Posted In: Analyst ColorDowngradesPrice TargetAnalyst RatingsMichael LaveryPiper Sandler
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