Meat processor Tyson Foods Inc. TSN appears to be in trouble again after media reports flashed another suspected avian flu breakout at Arkansas, where Tyson, the largest meat producer has its headquarters. As per Reuters, a case of bird flu was suspected by United Stated Department of Agriculture in a turkey flock in a farm in Arkansas, the company’s headquarter.
Bird flu is highly contagious in nature and infects the entire flock very quickly.
Tyson fears that the incident, if confirmed, will prompt a ban on U.S. poultry imports in various countries. Another meat producer Sanderson Farms Inc. SAFM has barred outsiders to enter the farms in the region in order to prevent widespread infections by the flu.
Notably, over the last two months, there have been several confirmed cases of bird flu in poultries in Minnesota and Missouri and even California, which prompted Taiwan, Singapore and Nicaragua to restrict the import of U.S. poultry.
Tyson Foods has a significant presence in the international market, especially in Canada, Central America, China, the European Union, Japan, Mexico, Middle East, South Korea, Russia, Taiwan and Vietnam.
The avian flu outbreak could prove detrimental to Tyson which largely depends on the chicken segment for revenue generation. In fact, the company recently shifted its focus to this segment to cater to the growing demand for chicken over red meat and beef.
The company also fears that the rising number of such incidents might induceU.S. consumers to reduce the consumption of meat.
The company currently carries a Zacks Rank #1 (Strong Buy).Investors interested in the food, meat processing sector may also consider stocks like Hormel Foods Corp. HRL carrying a Zacks Rank #2 (Buy). Another food company SUPERVALU Inc. SVU is also worth considering which has the same Zacks Rank as Hormel Foods.
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