Tyson (TSN) PT Raised to $81 at JPMorgan Following 4Q

JPMorgan raised its price target on Tyson (NYSE: TSN) to $81.00 (from $77.00) while maintaining a Neutral rating following the company's 4Q. On the earnings call, CEO Tom Hayes provided a bridge to explain segment EBIT guidance of ~$1.4 billion, up from $1.1B in FY17E. Key contributors include: 1) the addition of Advance Pierre (~$50MM), 2) the Financial Fitness program (~$90MM), and 3) cost structure improvements (~$150MM). TSN left its Pork segment outlook unchanged (>9% EBIT margin in FY18E), but industry processing margins have clearly deteriorated since this guidance was first issued.

EPS estimates are slipping slightly to account for weaker chicken prices and pork margins of late; however, the price target was raised to reflect a) the possibility of a bigger-than-expected share buyback in FY19E and beyond, and b) a higher valuation multiple. JPMorgan's FY18 estimate goes to $5.88 from $5.94 and FY19 estimate is cut to $5.78 from $5.80.

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