Broker snap: Investec sweetens target for Tate and Lyle

29th Mar 2012 11:18

Investec has maintained its sell rating for sugar and sweeteners group Tate and Lyle but raised its target price for the stock from 610p to 640p ahead of tomorrow's fourth quarter trading update.Analyst Martin Deboo said that "[we are] expecting little drama and are soft-pedalling our sell case at an increased target price."He said US corn refining economics are stable-to-improving, with co-product prices rising a bit, which is positive for margins. On the Sweeteners side, he said things are "still sweet" on the back of high sugar prices and a growing buzz around Tate's 'PureFruit' (Monkfruit) new sweetener. However, Deboo said that next year's consensus forecasts are still "curiously muted" with just 4% earnings per share (EPS) growth expected, "so Tate will need to talk up expectations at the prelims on May 31st if the fast money is going to stay interested."The broker has slightly raised its EPS target for the year-ending March 31st 2012 from 56.3p to 56.5p and moved its pre-tax profit forecast from £322m to £323m, hence the increase in target price.Shares in Tate & Lyle were down 1.06% at 697p in morning trade in Thursday.BC