logo-loader
viewTate & Lyle

Tate & Lyle still not sweet enough for Jefferies

Analysts have taken some confidence from reports about a probable better outcome to US sweetner pricing negotiations

Tate & Lyle -
Tate & Lyle is a major ingredient supplier to the food and drinks industries

Tate & Lyle PLC (LON:TATE) is no longer a hopeless case for analysts at Jefferies, which upgraded its forecasts for the food ingredients manufacturer.

Following a better set of half-year results than expected and taking confidence from indications of a probable better outcome to pricing negotiations for 2020 high fructose corn syrup contracts, the investment bank said it was giving up its former ‘underperform’ rating and raising its target price to 770p from 635p.

Jefferies upgraded its 2020 and 2021 earnings per share forecasts by 8% and 6%, more or less in line with the consensus view.

The new target price reflects this improved EPS forecast and an increased target multiple on the Solutions business.

However, the shares still are only getting a ‘hold’ recommendation as they remain “uncompelling” as EPS growth is still fairly flat if currency shifts are ignored.

While feeling Tate is “still struggling to deliver positive earnings momentum”, the analysts said they would take a more positive view if they saw further evidence of sustained volume and profit growth in the Food & Beverage Solutions business and further good news on sweetener economics.

However, there is potential for downside from FX risk to earnings GBP/USD in the event of a Conservative victory in the UK general election.

“The strong balance sheet affords some M&A salvation, but we prefer to look at that on its merits, when the time comes.”

Quick facts: Tate & Lyle

Price: 792.6 GBX

LSE:TATE
Market: LSE
Market Cap: £3.71 billion
Follow

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

FOR OUR FULL DISCLAIMER CLICK HERE

Watch

Full interview: BB Healthcare steadfast after rollercoaster 2019 for...

Should global politics and trade wars affect healthcare investments? Probably not - but they do, according to Investment Advisor and keen current affairs watcher at BB Healthcare Trust (LON:BBH) Paul Major. Major usefully highlights for Proactive London the folly of watching politics too...

46 minutes ago

2 min read