Shares in Tyson Foods, Inc. (TSN) rose after it announced that its beef and pork subsidiary will resume limited production at its Waterloo, Iowa plant on May 7.
Its subsidiary Tyson Fresh Meats, Inc. had temporarily suspended operations at its pork processing plant on April 22 to contain the coronavirus outbreak and test its employees for COVID-19. Prior to that, the plant was operating at reduced capacity due to coronavirus-related disruptions. Tyson shares rose 1.8% to $58 in pre-market U.S. trading after nosediving as much as 51% this year.
“Our top priority is the health and safety of our team members,” said Tom Hart, plant manager of Tyson’s Waterloo facility. “We tested team members and took proactive steps to complement our existing prevention efforts, working with epidemiologists and other experts.”
Meanwhile, Costco (COST) this week announced that it is temporarily limiting fresh meat purchases to a total of 3 items per shopper among the beef, pork and poultry products as the coronavirus pandemic led to limited supply due to the forced closure of a number of meat processing plants.
Tyson Foods said that all employees returning to work have been tested for COVID-19, and any staff member who has tested positive will remain on sick leave. Employees who have not been tested will be unable to return to work and all new hires will be tested prior to starting work. In addition, Tyson Foods increased increased short-term disability coverage for staff to 90% of normal pay until June 30.
Bryan Spillane, analyst at Merrill Lynch on Tuesday cut the stock’s rating to Hold from Buy, citing the coronavirus impact on operations.
“Latest data from USDA shows that slaughter rates at beef and pork plants are running down 35% and 40% respectively from pre-COVID levels,” Spillane said in a note to investors. “While these rates should ease over the coming weeks, they remain a meaningful headwind to TSN’s operations over the medium term.”
TipRanks data shows that Wall Street analysts are evenly divided on Tyson’s stock with 5 Buys and 5 Holds adding up to a Moderate Buy consensus rating. The $77.50 average price target implies 36% upside potential should the target be met in the coming 12 months. (See Tyson stock analysis on TipRanks).
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