Broker snap: Investec reiterates 'buy' rating for Tate & Lyle

10th Dec 2012 09:36

Investec has reiterated its 'buy' rating and 850p target price for sweeteners and food products group Tate & Lyle, saying it was impressed by last week's investor seminar in Chicago.Analyst Martin Deboo said that the key takeaways from the meeting were "innovation and collaborative capabilities, plus a potential cost advantage"."We liked the clarity around the innovation strategy and sense of executional strength in depth. The emergence of potentially winning products like Soda-Lo, Purefruit and Tasteva further reinforced the message of change afoot for us," he said.Deboo added that concerns about competition ("for both customers and assets") were partly reassured by the company.Another fillip was last week's news that Tate has agreed a buy-in with Legal & General for 30% of its total pension liability, the analyst said."A small risk premium is payable and the accounting deficit will increase slightly as a result. But this feels like good business to us."Investec recommends to 'buy' the stock, but suggested that there's no need rush ahead of a "more-challenging-than-expected sweetener pricing round". This could hurt the shares between now and the third-quarter trading update in January so there might be a better entry point once this has resolved, the broker said.Shares were up 0.63% at 763.79p on Monday morning.BC