Broker snap: Premier Foods turnaround impresses Morgan Stanley

1st Apr 2011 11:46

Morgan Stanley has lifted its rating on Premier Foods praising the Hovis bread and Branston pickle maker's efforts to tackle its balance sheet issues.It now has an "over-weight" rating on Premier, from "equal-weight" previously. Morgan Stanley has a 40p price target on the company, which trades on less than six times earnings, it notes."Balance sheet issues are largely resolved," the broker says, adding that after four years of integrating acquisitions Premier should be able to deliver profit growth."The environment is tough, with input costs rising and intense promotional activity, but Premier's guidance looks sufficiently conservative and the company has various self-help levers to offset these pressures," Morgan Stanley said.RG