Tate & Lyle PLC (LSE:TATE) saw its share price reach 760p this month, regaining its value in mid-September as cost inflation saw the food supplier’s shares fall to as low as 657p.
The reduction of corn and gas prices in Europe means Jefferies believes “there wouldn’t appear to be much downside” for the British business.
The US bank expects the food and beverage solution industry’s underlying profits to grow by up to 12% over the next financial year.
Tate issues a third-quarter trading statement this month with inflation, the sector’s momentum, volume growth and the recovery of its plant-based arm Primient as key indicators according to the bank.
“The peer that TATE most closely resembles, in our view, is INGR (Ingredion Inc) - similarly corn-centric, pursuing the same solutions-led strategy and investing heavily in Tapioca, Stevia, & Pea Protein,” analysts at Jefferies added.
Ingredion’s share price has grown by 17.5% in the last six months compared to a 1.5% decline for Tate & Lyle.
Jefferies rates the stock a “hold” and targets an 800p share price.