Shares of U.S. meat producer Tyson Foods (NYSE:TSN) dropped approximately 2% in premarket trading to $59.51 after brokerage Piper Sandler downgraded the stock to "underweight" from "neutral."
The downgrade stems from concerns over rising cattle costs and a potential decline in beef prices, which could negatively impact Tyson’s profit margins.
Piper Sandler highlighted that the retention of heifers—young female cattle kept for breeding—could exacerbate supply issues in the near term.
The brokerage added that any improvement in cattle supply is likely to take up to two years.
The company’s chicken segment is also facing increased competition, leading to additional marketing and promotional investments that further pressure margins.
Piper Sandler lowered its price target for Tyson Foods to $50 from $57, cautioning that reduced supply and a possible consumer demand slowdown could create challenges for the broader meat market.
Currently, three out of 12 brokerages rate Tyson Foods stock as "buy" or higher, while seven rate it "hold" and two "sell," according to LSEG estimates.
Despite the downgrade, Tyson Foods' share price is up nearly 13% year-to-date as of the last close.