Tate & Lyle boosted by Goldman Sachs upgrade

22nd Jul 2015 09:19

(ShareCast News) - Tate & Lyle got a boost after Goldman Sachs upgraded the stock to 'neutral' from 'sell' and raised its price target to 470p from 460p following its recent underperformance.It noted that since being added to the 'sell' list on 1 December 2014, the stock is down 16% versus the FTSE World Europe up 2.5%."We continue to believe that Tate's poor cash conversion is structural rather than cyclical, and that its older asset base, pension deficit, and rising working capital will limit its ability to improve cash conversion going forward."In addition, GS said the company's Speciality Food Ingredients business is dependent on the scale benefits it leverages from the bulk business and therefore the extent to which SFI can dominate the group is limited.As it rolls forward the base year for its valuations sector-wide, Goldman now values Tate & Lyle on a target price-to-earnings of 11.1x applied to its June 2017 earnings estimates.At 0824 BST, the company's shares were up 1.8% at 520.15p.