TSN Primed For Fresh Highs Amid Upbeat Exec Comments

A historically bullish signal could send the stock soaring

Deputy Editor
May 19, 2021 at 3:23 PM
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Tyson Foods, Inc. (NYSE:TSN) is in focus today, following comments made by executives at the company during the BMO's Farm to Market Conference, noting the positive effect another round of stimulus checks will have on protein demand, as well as the improving food service space. Argus responded to the upbeat commentary, lifting its rating on TSN to "buy" from "neutral," while assigning the stock a $92 price target. 

While a dismal trading day for the broader market is likely putting some pressure on TSN, which was last seen down 1.4% at $78.78, the stock just landed at a 14-month high of $81.79 late last week. This peak comes amid historically low implied volatility (IV) -- a bullish combination for TSN in the past. A study from Schaeffer's Senior Quantitative Analyst Rocky White reveals that there has been three other times in the past five years when the security was trading within 2% of its 52-week high while its Schaeffer's Volatility Index (SVI) stood in the 20th percentile of its annual range or lower -- true for TSN which sports an SVI of 22% which stands higher than just 4% of readings from the past year. 

This study shows that one month after these three signals TSN was higher, boasting an average return of nearly 7%. From its current perch, a move of similar magnitude would put the equity at $84.29, marking a level the untouched since early February of 2020, when pandemic fears began to take hold of the market. 

The stock's technical setup looks good, too. The 30-day moving average has acted as a solid layer of support for several months now, guiding the equity toward last week's peak. Even as the stock cools, today's losses were neatly contained by the trendline, keeping it at a 22.4% lead for the year. 

TSN May 19

A round of analyst upgrades could be in the cards for Tyson, should some of these brokerages begin to follow Argus' lead. Coming into today, four called TSN a "strong buy," while four said "hold." 

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