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Merrill Lynch Cuts Tyson Foods Estimates


Merrill Lynch cut its estimates on Tyson Foods (TSN).

Analyst Leonard Teitelbaum keeps the neutral rating on the stock. He says Tyson preannounced fourth-quarter earnings per share will likely be in the 14 cents to 21 cents range, which is below his and consensus estimates of 33 cents. He notes there are four key reasons for the earnings per share shortfall: grain hedging activity, softer-than-expected demand for chicken; weakness in beef operations, and higher-than-anticipated raw material costs for its prepared-food products. Teitelbaum believes Tyson went long in a market that fell, and where hedges were under water. He notes this forms the basis for the loss recognized in the fourth quarter. He cut the 33 cents fourth-quarter earnings per share estimate to 18 cents, and cut the $1.53 fiscal 2005 (Sep.) estimate to $1.40.


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