Meat Stocks Face Renewed Scrutiny After Trump's DOJ Probe Call
The move revives attention on an industry already paying out hundreds of millions in price-fixing settlements, casting a shadow over Tyson Foods and JBS.
The U.S. meatpacking industry is once again in the regulatory crosshairs after former President Donald Trump called for a Department of Justice investigation into the sector’s largest players for alleged price manipulation. The renewed call for a probe casts a fresh shadow of uncertainty over companies like Tyson Foods (TSN) and JBS, amplifying concerns in an industry that has recently paid out massive settlements over price-fixing allegations.
Trump’s statement spotlights the persistent legal and political challenges facing the highly concentrated sector, where a few dominant companies control the vast majority of the market. This structure has fueled long-standing accusations from ranchers and consumers that meatpackers collude to suppress livestock prices paid to farmers while simultaneously inflating prices at the grocery store.
While the political rhetoric adds headline risk, the underlying issue is a material one for investors. The industry has been mired in litigation for years. In one of a series of recent legal resolutions, Tyson Foods and Cargill agreed to pay a combined $87.5 million to settle a beef price-fixing lawsuit in October. Separately, Tyson agreed to an $85 million settlement in a pork price-fixing case around the same time. Brazil-based JBS, another dominant processor, has also entered into significant settlements, including a $25 million payment to grocery consumers and another multi-million dollar agreement with cattle producers.
In each case, the companies have denied any wrongdoing, typically stating that the settlements were a way to avoid the cost and distraction of prolonged litigation. Despite these denials, the continuous stream of payouts highlights a persistent legal overhang that a potential DOJ probe could exacerbate.
Shares of Tyson Foods were trading up approximately 2.2% in afternoon trading, suggesting that the market may be desensitized to such headlines after years of similar allegations. The broader market's positive performance may also be providing a lift. However, the threat of a federal investigation could introduce a new level of scrutiny beyond civil lawsuits.
The Department of Justice has already signaled its focus on anticompetitive behavior in the food sector. Last year, the DOJ filed a lawsuit against data firm Agri Stats, alleging it facilitated the exchange of sensitive information among poultry and pork processors to unlawfully manipulate markets. This existing federal interest could lend weight to calls for a wider investigation into the beef industry.
Wall Street analysts have largely maintained a neutral stance on the sector's key players amid the legal battles. Tyson Foods currently holds a consensus "Hold" rating from analysts, with an average price target of $61.75. This suggests that while regulatory risks are a known factor, many analysts see them as largely priced into the stock, balancing them against the company's significant market share and operational scale in the global food supply chain.
Moving forward, investors will be closely watching for any official response from the Department of Justice or the companies themselves. Any indication that a formal probe is being considered could weigh heavily on the sector, potentially impacting stock valuations and forcing a reassessment of the legal and financial risks embedded in the nation's largest meat producers.