Tate & Lyle PLC (LSE:TATE) shares rose 2% on Friday after Citigroup upgraded the food ingredients group to 'buy', saying the market is undervaluing its shift away from bulk commodities towards higher-margin speciality products.
The broker said Tate’s current valuation still reflects that of a commodity supplier, despite progress in repositioning the business.
It believes investors have been overly focused on short-term pricing trends and volume sensitivities, known as elasticity, which may not fully reflect the company’s improved earnings profile.
Citi expects July’s capital markets day to clarify how the “new Tate” is tapping into demand for food reformulation, such as sugar and fat reduction, and securing access to higher-margin product lines.
It sees scope for Tate to deliver annual earnings growth of 7–9% from 2026 onwards.
The bank also flagged potential for share buybacks of up to £100 million a year after 2026, adding that there is limited downside risk to the company’s 2025 earnings guidance.
Citi raised its price target from £6.00 to £6.70, implying further upside from Friday’s levels. The shares are currently changing hands for 598p (up 12.5p).
Tate & Lyle has been reshaping its portfolio to focus on ingredients for healthier and reformulated foods amid changing consumer and regulatory trends.