Tyson Foods Doesn't Like Being Sued Or Downgraded

Shares of Tyson Foods, Inc. (NYSE: TSN) were trading lower by more than 10 percent Friday after analysts at Pivotal Research downgraded the company to Sell from Buy with a price target slashed all the way to $40 from a previous $100 due to an ongoing class action suit.

According to Cook County Record, Maplevale Farms, a food service provider, brought a federal class action antirust lawsuit against 14 of the largest poultry producers, including Tyson.

The suit argues that the price of broiler chickens have remained high at a time when input costs, especially corn and soybeans, are falling.

The complaint alleges that major poultry producers shared private information among themselves to artificially constrict the supply of poultry and drive prices higher.

"If a single Broiler company reduces Broiler capacity, there is no guarantee that competitors will do the same, and therefore the company acting alone has simply ceded market share to its competitors," the complaint said. "However, if other Broiler companies similarly exercise discipline and reduce capacity and production, Broiler purchasers will be faced with resulting higher prices, which they will have no choice but to pay. The alternative – to not purchase Broilers – is not an option for most of Defendants' customers."

Tyson Responds

Tyson Foods issued a statement on Friday. The company acknowledged a research report has been issued which commented on the pending antitrust litigation.

"While we don't normally make substantive comments regarding pending litigation, we dispute the allegations in the complaints as well as the speculative conclusions reached by the analyst, and we will defend ourselves in court," the company said. "Contrary to what the analyst assumed, we have not made any changes to our business practices in response to the complaints."