Meat Stock Falls Short After China Suspends Poultry Imports

The equity is down over 32% year-to-date

Digital Content Manager
Jun 22, 2020 at 11:09 AM
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The shares of Tyson Foods, Inc. (NYSE: TSN) are down 2.8% at $61.40 this morning, after China's customs authority said on Sunday it suspended poultry imports from a plant in Arkansas with a cluster of confirmed coronavirus cases. Though the World Health Organization (WHO) notes that there is no evidence to support the spread of COVID-19 through food, China has stepped up oversight of imported goods after the respiratory disease was linked to a sprawling wholesale market in Beijing.

The equity's efforts to climb out of its mid-March, nearly five-year lows at the $42 level, have mostly stalled. On the charts, TSN's 20-day moving average has acted as both support and resistance over the past year, but now looks to have moved in as a floor. However, gains have been capped by overhead pressure at the $66 mark over the past two weeks. Long term, TSN is down 32.2% year-to-date.

Analysts were evenly split toward the equity coming into today, with four of the eight in coverage sporting a "strong buy" recommendation, while the remaining carried a tepid "hold." Meanwhile, the 12-month consensus target price of $72.72 is a 15% premium to current levels.

The appetite for calls is unusually high in the option pits, however. In the last 10 days, 5.47 calls were bought for every put at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits higher than 90% of readings from the past year, meaning calls are being picked up at a faster-than-usual clip. 

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