Miller Tabak: Tyson Foods Should Report Strong Quarter

Tim Tiberio of Miller Tabak previewed Tyson Foods, Inc.s' (NYSE: TSN) fourth quarter results which are due to reported before Monday's market open. The analyst is now projecting the company to earn $0.74 to $0.76 per share in the fourth quarter on revenue of $10.622 billion.

Tiberio notes that he previously lifted his fourth quarter earnings per share estimate to $0.74 from $0.71 due to overall chicken prices proving to be higher than expected into September.

The analyst estimates Tyson Foods to report a beef operating margin of 4.0 percent, higher than the 3.3 percent he previously projected. The higher beef operating margin offsets a reduction in his pork operating margin estimate to 5.3 percent from a prior 5.6 percent.

Tiberio adds that he expects the company to leave its fiscal 2015 outlook of at least 10 percent earnings per share growth unchanged.

“We think Tyson will underline positive demand drivers for chicken heading into fiscal 2015 (i.e. lower gasoline prices, positive beef price reference),” Tiberio wrote. “Plus, we think Tyson has been short white meat during peak spring-summer demand in the past two seasons, so seasonal weakness in breast prices in Q1 has enabled the company to employ a ‘buy-in' strategy ahead of rising spring demand."

The analyst adds that a recent rally in corn and soymeal over the past month could limit the company's ability to hike its fiscal 2015 feed cost savings above the initial $400 million the company projected in July.

Shares are Buy rated with a $48 price target.