Meat Processors

In with the Old, Out with the New

Published June 8, 2020

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Key Takeaways


  • Over the last few months, conventional meat processors have been facing challenges due to Covid-19, including plant shutdowns, lower foodservice demand, and higher costs from lower production, higher bonuses, and enhanced safety measures.

  • Year-to-date, shares of Tyson Foods, Inc. (TSN), Pilgrim’s Pride Corp. (PPC), and Sanderson Farms, Inc. (SAFM) have all significantly underperformed the S&P 500, while Hormel Foods, Inc. (HRL) has modestly outperformed the market.

  • We forecast Q2 sales and profits for conventional meat processors will be the trough and conditions will rapidly improve by Q3 and continue to further advance.

  • Over the long term, we see significant growth opportunities due to 1) new trade channels; 2) rising global meat demand; and 3) a global meat shortage caused by African Swine Fever.

  • We believe shares of plant-based meat company Beyond Meat (BYND) have been excessively rewarded due to the dynamic playing out in the conventional meat space. As a result, we recently lowered our opinion on BYND to Sell from Hold.


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