JPMorgan upbeat about sustainable profit growth at Tate & Lyle

3rd Jun 2014 11:14

In spite of a tough year ahead of Tate & Lyle, JPMorgan Cazenove has reiterated its 'overweight' recommendation for the sugar and sweeteners manufacturer, saying that the business is "focused, fixed and ready for growth".The bank has trimmed its profit forecasts for the company for the current financial year ending March 2015 to reflect further strengthening of the pound and a weak first quarter for high fructose corn syrup."While [this year] is likely to be another tough year, we believe Tate's ingredients business has a stronger product pipeline, deeper customer relationships and better infrastructure. This should drive high-quality, sustainable profit growth and group earnings per share growth from [next year]," JPMorgan said.The bank highlighted the investment Tate has made in its Specialty Food Ingredients (SFI) division over the past four years in an effort to improve the quality and sustainability of growth."The business is now said to have a stronger innovation pipeline and deeper customer relationships, we believe this to be true. The company has also announced a £100m investment, mostly in SFI capacity expansions, to facilitate the faster, more-consistent growth Tate should now deliver."JPMorgan kept an 825p target price for the shares, which were trading 0.7% higher at 692p by 11:24 on Tuesday.BC