Broker snap: Target raised by 8% at Tate & Lyle

31st May 2011 12:18

UBS raises its target price for Tate & Lyle and fine-tunes its year-ended-2012 estimates following the food and ingredients group's full-year results, which were broadly in-line with expectations.For the 12 months ended 31 March, adjusted pre-tax profit grew by 24% to £267m, while earnings per share (EPS) increased by just 9%, reflecting the operating loss incurred by Sugar Trading prior to disposal.The broker has cut back its current year pre-tax profit forecasts by £5m to £300m as a result of lower by-product revenues and start-up costs at the Alabama sucralose facility. EPS is upped by 2% because of a lower-than-expected tax charge."Whilst CEO Ahmed stresses his 'focus, fix, grow' programme will take 2 years to implement, it looks likely that, in the meantime, economic recovery and (the umbrella of) higher sugar prices will allow him to deliver solid double digit EPS growth this year," said analyst Alan Erskine.However, UBS is reluctant to turn more positive as the stock is trading on an enterprise multiple slightly above the average of the last decade.A 'neutral' rating is retained, while the target price is increased by 8% to 595p, from 550p.---BC