Broker snap: JPM sees dull year for Tate and Lyle
JP Morgan has raised its price target on Tate and Lyle to 440p from 420p, but said it expects no surprises from the sugar giant over the coming year.
Tate and Lyle's trading statement yesterday was a 'non-event' the broker said, adding that it maintains its 'underweight' rating on the stock.
The company expects pre-tax profit from continuing operations in the second half to be 'broadly' similar to that of the first six months.
It made a pre-tax profit before exceptional items of £117m in the first half of the year ending 31 March.
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JPM noted that Tate and Lyle's share price has risen by 20% over the past year, driven by the perception that it could benefit from the rise in global agricultural commodity prices.
However, it said the chance of Tate 'surprising on the upside' in 2008/09 was limited, adding that higher corn prices could hurt the company's profitability.
Tate uses the grain to make sugar, animal feed, ethanol and other products. Corn prices have soared in recent months, in line with higher grain prices generally.
JPM said it expects Tate to report pre-tax profit growth of 15% to £285m when it reports its 2007/08 results on May 22.
