Friday tips round-up: Tate & Lyle, AstraZeneca

7th Nov 2014 08:44

Tate & Lyle has had a very difficult year with the two profit warnings. The reasons behind the downgrades are varied, ranging from cold weather in the US to a fire at the Singapore factory where its sweetener Sucralose is manufactured. In aggregate all of those negatives knocked £41m out of the company's profitability. Then there is the plummeting price of Sucralose, even if management seems to expect that it will eventually recover. On the positive side of things, albeit somewhat surprisingly, the firm seems to be pondering a sale or closure of some of its assets in that space.Regarding its bulk products division, the all-important negotiations with soft drinks companies on supply about equal the demand which is a positive. Furthermore, the interim dividend was raised by 5% to 8.2p. The shares' dividend yield may be about all that has been propping them up. 'Hold' for income, although the upside to the stock may be limited as it looks fully rated, writes The Times's Tempus.Markets are all about price signals and interpreting them correctly. Shares of AstraZeneca were trading at about £37 before the first buy-out offer from Pfizer and on Thursday they were at £45.91. Hence, it would seem clear that markets continue to believe that the US firm will come back to the table come late November. Moreover, the fact that the US giant was willing to shell out approximately £56 a share would seem to reflect that the industry is more optimistic about Astra's drugs pipeline than its own shareholders.This is important as it means that even if rules in the US relating to tax inversion may have lowered the probability of a second bid, the British outfit is still a good long-term investment, says The Daily Telegraph's Questor team.