Mizuho says Tyson Foods has room to operate because consumers’ appetite for animal protein is increasing despite rising meat prices. The bank initiated coverage of Tyson with an outperform rating. He also set a price target of $72, implying a 17% upside from Wednesday’s closing price. “We believe TSN is poised to benefit from structural growth in protein demand,” analyst John Baumgartner said in a note to clients Thursday. “Despite record-high prices, U.S. meat demand is at a record high, and a food culture that is shifting in favor of nutritious foods and animal protein should survive in a world of GLP-1 and personalized health data.” Meat consumption is expected to increase by 47.9 million tons over the next 10 years, according to a report from the Organization for Economic Co-operation and Development. Meanwhile, red meat and poultry production could reach 108.4 billion pounds by the end of 2026, up 1% from a year ago, according to the U.S. Department of Agriculture. Indeed, beef prices rose about 15% last year, and geopolitical tensions could cause prices for other meats to rise as well, analysts say. But Mizuho expects demand for meat to remain strong, which will benefit Tyson. “We expect meat to remain an essential nutrient, including at least +1% annual growth in per capita chicken demand and premium innovation across complexes, which outperforms center store foods (-1% average volume over two years and increasing pressure on prices),” Baumgartner said. Mizuho said Tyson is also making investments to modernize various aspects of its operations to make it more efficient and ready to meet growing demand for meat. “Significant reinvestment over the past five years to strengthen supply chain and network optimization and establish robotics and enhanced analytics supports stronger execution and greater operating leverage,” Baumgartner said. Mizuho’s call runs counter to Wall Street consensus. Of the 15 analysts covering Tyson, only five have a buy or strong buy rating on the stock. 10 stores on the Street have held ratings on the stock. Tyson stock has outperformed the market, up 5% since the beginning of the year. However, the stock price has been flat over the past 12 months.
