Please ensure Javascript is enabled for purposes of website accessibility

COVID-19 Shuts a Big Tyson Pork Facility; Credit Suisse Predicts Falling Chicken Sales

By Rhian Hunt - Apr 6, 2020 at 3:53PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

More than 24 cases were reported at the Iowa facility.

While Tyson Foods (TSN -0.23%) recently switched over to producing more meat packed for grocery store sales and seemed to be avoiding the worst impact of plunging restaurant orders, problems may still be on the horizon for the food giant. Monday brought two pieces of bad news: The COVID-19 coronavirus compelled Tyson to shut one of its major Iowa meat-processing plants, and Credit Suisse issued a research note predicting that the company's chicken sales will falter in the wake of the earlier surge caused by people stocking up to prepare for quarantines.

The large pork slaughterhouse was closed Monday after more than two dozen workers at the location were diagnosed with the novel coronavirus, the company told reporters. The site in Columbus Junction, Iowa, ordinarily accounts for approximately 2% of the USA's daily pork production, slaughtering about 10,000 pigs every 24 hours. Now, Tyson says it will divert those pigs to other plants as it tries to maintain its usual production rate.

Ham being processed and packaged on an assembly line.

Image source: Getty Images

The cluster of infections erupted despite Tyson's efforts to keep the virus out of its production areas, using methods ranging from taking employees' temperatures to a greatly augmented sanitizing and cleaning regimen at all locations. Workstation dividers, social distancing rules, and the provision of as many masks as possible also failed to prevent the outbreak.

While Tyson grapples with its pork processing problem, trouble looms on another front. A research note from Credit Suisse observes that "consumers and grocers have filled their freezers with inventory" and, as a result, grocery demand for chicken products is slumping. In fact, the firm claims that grocery sector sales of processed fowl are no longer offsetting the 50% nosedive in restaurant sector chicken orders for Tyson.

Credit Suisse thinks chicken margins will soon drop below Tyson's normal levels but still maintains a $70 share price target for the company, more than 25% higher than it currently trades. 

Rhian Hunt has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Tyson Foods, Inc. Stock Quote
Tyson Foods, Inc.
$79.92 (-0.23%) $0.18

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/10/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.