Broker snap: Jefferies sees re-rating potential at Tate & Lyle

3rd Jun 2013 10:18

Jefferies recommends investors to 'buy' shares of food group Tate & Lyle at a price target of 980p, highlighting the performance of its Speciality Food Ingredients (SFI) division."We were encouraged by the underlying trends in SFI for FY-13 and continue to believe the market under appreciates the medium-term growth potential of this enhanced platform and improved commercial capability," the broker said on Monday morning.Full-year results for the year to March 31st (released on Thursday) revealed an acceleration in SFI top-line growth from 6.0% in the first half to 9.0% in the second half, and management indicated that the current year is likely to show similar growth trends with all SFI segments contributing. Jefferies said that this outlook "is one of the most confident we have seen from this management team thus far"."Untapped blue-sky growth opportunities include private label, small- to medium-sized enterprises, emerging markets which only account for 12-15% of SFI, and the IS/IT roll-out will also add further revenue opportunities"The stock is trading on a calendar 2014 price-to-earnings multiple of 12.8, an 11% discount to the sector. The broker said that re-rating potential at Tate & Lyle "remains attractive". The stock was up 1.76% at 830.83p by 10:27 on Monday.