Credit Suisse ups Tate & Lyle to 'neutral'

8th Jul 2015 09:24

Credit Suisse upgraded Tate & Lyle to 'neutral' from 'underperform' following the recent underperformance that has seen the shares fall below its price target.CS noted that the shares have de-rated to 15 times this year's estimated earnings and the dividend offers further support."Close to £5 looks a reasonable price for Tate & Lyle and we revert to a 'neutral' rating," said the bank.It said that after several profit warnings, the earnings should now have been re-based. CS said it doesn't see any prospect of a cyclical recovery, but neither does it see a big risk from here.The bank said the mix of Tate's profits between Specialty Food Ingredients and Bulk hasn't changed materially over the last few years but the composition of both parts has.It noted that Specialty historically included a significant contribution from Sucralose, but now that profits there have collapsed this is no longer the case. "The remaining Specialty business has a better more robust look to it."The bank cut its price target on the stock to 510p from 550p as it modestly revised its estimates for FX.At 09:37, shares were up 1.8% at 512.50.