Credit Suisse ups Dairy Crest to 'outperform', assumes sale of dairy division

8th Jul 2015 09:40

Credit Suisse upgraded Dairy Crest to 'outperform' from 'neutral' and raised the price target to 580p from 485p, as it revised forecasts to assume a sale of the dairy division.CS said the conciliatory tone struck by the Competition Markets Authority, together with Muller's desire to find an agreeable solution, augurs well for a satisfactory conclusion to Dairy Crest's proposed Dairy sale. "Better then to model on the assumption the deal goes through," said the bank."A rather more stable branded profit base, the benefits of recent investments to come, and a yield of over 4%, and the possibilities outlined above, see us raise our rating," said Credit Suisse.The bank said the disposal of Dairy could leave the company itself vulnerable to a bid."Quite what the probability of a bid is could be open to conjecture, but we would class it as pretty reasonable."CS noted that the food industry has seen many instances where companies have trimmed down to a focused core, only to attract the attentions of third parties, highlighting Cadbury, Numico, Dalgety, Sara Lee, Ralston and Bestfoods.At 09:46, Dairy Crest shares were up 2.9% at 533p.