Credit Suisse: African Swine Fever Could Mean More Upside for Tyson Foods Stock

TSN shares have been in a sharp uptrend in 2019

by Josh Selway

Published on May 14, 2019 at 9:19 AM

Despite new competition from Walmart (WMT) and Beyond Meat (BYND), the shares of Tyson Foods, Inc. (NYSE:TSN) have still had a huge year, up 49% in 2019 to trade at $79.57. The outperformance has pushed the equity's 14-day Relative Strength Index (RSI) deep into overbought territory, last seen at 82. However, Credit Suisse weighed in on TSN stock this morning, saying more upside is coming in the months ahead.

The analyst note says that meat prices are set to rise due to the effects on global supply from the African swine fever outbreak, something Wall Street hasn't accounted for. As such, the brokerage firm raised its earnings-per-share estimate for the fiscal year 2020 by 18 cents, and upgraded its opinion on the security to "outperform" while setting a $96 price target -- the highest among all covering analysts and deep into record-high territory.

Bullish or bearish, TSN is sporting some attractive data for perspective options buyers. For starters, the Schaeffer's Volatility Index (SVI) of 25% ranks in the low 18th annual percentile, revealing subdued volatility expectations at the moment. Plus, the Schaeffer's Volatility Scorecard (SVS) for Tyson Foods stands at 88 out of 100, showing the shares have regularly exceeded options traders' volatility expectations in the past year.

Near-term options traders have taken a decidedly call-heavy approach, based on the Schaeffer's put/call open interest ratio (SOIR) of 0.44, ranking in the 16th annual percentile. This shows call open interest heavily outweighs put open interest for contracts expiring within three months. Peak open interest of 14,223 contracts resides at the June 80 call, while second place belongs to the May 67.50 call, where 9,506 options are open.


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