Dive Brief:
- Tyson Foods is disputing a report from equity research firm Pivotal Research Group, which downgraded the meat processor's shares due to an antitrust lawsuit filed against Tyson last month, Meat + Poultry reported.
- The firm lowered the price target for Tyson shares from $100 to $40, which caused the company's shares to plunge as much as 11.5%.
- The lawsuit claims that the defendants, including Tyson, Koch Foods, Perdue Farms and several other major poultry processors, conspired to manipulate the price of broiler chickens as early as 2008 by coordinating their output and limiting production to cause prices to rise.
Dive Insight:
As a general rule, companies don't tend to comment on pending litigation, but Tyson made an exception in this case. The company disputed both the lawsuit's claims and the analyst's report and shares downgrade, saying in a news release that it would defend itself in court.
Tyson has two main reasons why it may have chosen to take a nontraditional stance against this report and litigation. The lawsuit could be based on false accusations and misleading or misconstrued evidence, and Tyson decided to speak out before its stock takes any more of a dive based on inaccurate allegations.
Another possibility is that the lawsuit's claims are true, and Tyson wants to get ahead of the narrative surrounding a potential scandal. The company could be attempting to save face before the case moves forward or more evidence surfaces that causes more financial or reputational damage to the company.
Share prices for Pilgrim's Pride and Sanderson Farms also crashed on Friday due to the equity firm's report, totaling hundreds of millions in market value for several poultry processors — all based on one analyst's assessment. This demonstrates the power analysts can have in guiding the opinions of investors and shareholders. The industry will be watching whether any other companies dispute the report and lawsuit's claims as this story develops.