Tyson Foods: Navigating Beef Challenges While Betting on Chicken and Automation

We initiate on TSN at Hold / $47 PT. Tyson Foods, Inc. is a global protein processor and marketer of

beef, pork, chicken, and prepared foods for retail, foodservice, and industrial customers. Underneath the surface of the large-cap operator lies the legacy volatility in Beef and early-stage perks of the transformation in Chicken and Branded Foods. Our estimate captures FY25 diluted EPS of $3.60 (+60% YY) / -6% N-Cons as we back in the full -$200MM/yr Beef segment loss and additional incremental Chicken-brand investments already highlighted by mgmt that are often understood from reported N-benchmarks. While these near-term headwinds may not clear the air quickly, grain tailwinds and production ramp should push Chicken AOI toward $1.25BB by FY26 and give TSN headroom as the cycle reverts. Simultaneously, we see the Prepared Foods margin slowly grind higher through decent execution, but value and strategies at large accounts like WMT (1 customer >18% of revenue) keep us cautious. With this backdrop, we set our target multiple at 11.5x on FY26E EPS, a slight premium to peers, but a deep discount to current 21.1x, reflecting the credibility of the earnings instance, but tempered by cyclicality and outsized capex with automation and the beef rebuild. Execution is the key variable in our view, particularly in the ability to normalize beef and the possibility of incremental cost inflation. Net-net, with shares priced well above our derived fair value on muted risk-reward, we look to observe until the margin recovery story gets institutional