Trade concerns have pressured Tyson Foods, Inc. (TSN) and are making its investors wary in the short term.
In today's trading is down by about 0.6% to $63.03 as of 3:01 p.m. in New York. The shares slumped 22% loss for shareholders year to date.
"In the near term, we need to let these trade issues clear up. For now, it's just too uncertain to add to [the position]," Spencer Shelman, portfolio manager for Palouse Capital, told Real Money. "We have not been adding to our position [in Tyson] on their way down and don't plan on adding to it soon."
His firm, which oversees a total of $295.4 million on behalf of its clients, holds 46,108 shares of Tyson.
That said, Shelman said his firm is comfortable holding the stock for the longer term, as they feel secular trends in protein demand will allow the company to grow in the future.
Analysts have expressed concerns about Tyson's exposure in recent months.
Credit Suisse senior equity analyst Robert Moskow cited "significant pressure in pork and chicken in the fourth quarter and fiscal year 2019 from export tariffs and excess domestic supplies," as major impacts on the future of the share price in a note following the company's fiscal third quarter earnings call.
He added that Mexico is a vital market for chicken exports and that "uncertainty in trade policies" is adversely affecting sales of these products.
As a result, he issued a neutral rating on the stock and a target price of $66 per share.
To be sure, the company has worked hard to address these very concerns in recent months and has expressed encouragement at recent agreements between the leaders of its two largest markets.
"Certainly, the Mexico discussions have gone very well, but we need for that market to remain open," vice president of investor relations Jon Kathol said at a Barclay's Consumer Staples Conference on September 5. "Mexico is our largest export market and a large consumer of U.S. hams, and it's critically important to that pork market that the hams continue to make their way to Mexico."
His comments build on comments from outgoing CEO Thomas Hayes, who identified North American Free Trade Agreement (NAFTA) in a presentation to National Cattlemen's Beef Association this summer.
"We need a modernized and permanent NAFTA as well as the removal of retaliatory tariffs on U.S. pork, so we can bring stability to our business in Canada and Mexico," he said in his address.
Since that time the company has expressed confidence that these trade spats can be resolved and showed optimism on meetings that took place between the Mexican president Pena Nieto and president Trump late last month.
As Noel White, the company's international business head, becomes CEO for the 83-year-old food company, the defense of these key export markets comes into further focus as he tries to stem the downward trend trade skirmishes, including those over NAFTA, have brought.
The company's director of media relations Gary Mickelson told Real Money this morning that global growth and international opportunities will remain an area of focus for the company as it maintains the focus it held under Hayes.
As the company's largest export market, Mexico and therefore NAFTA will be at the top of priorities list for the new leader.
