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 (NYSE: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.
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The Kellogg Thesis: In a separate note, analyst Lavery downgraded the rating for Kellogg Company (NYSE: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.
