Berenberg ups target for Tate & Lyle despite cutting profit forecasts

Analysts at Berenberg upped their target price on food ingredients manufacturer Tate & Lyle from 625.0p to 665.0p on Tuesday despite further reducing its full-year 2021 profit estimates for the group.

Following its 10% forecast reductions in March, Berenberg cut its 2021 forecasts on Tate & Lyle by a further 12%. However, the analysts were encouraged by news that trading in each of the group's divisions had been ahead of expectations during the fourth quarter and that its full-year earnings would be "slightly ahead" of guidance.

"As with peers, where Tate's FY 2021 earnings ultimately land will depend on the time frame of lockdowns and subsequent easing measures," said Berenberg.

"However, with significant divisional exposure to out-of-home consumption (20-50%) and some industrial end-markets, Tate's earnings are particularly sensitive, and we expect no rapid bounceback in volumes after Q1."

Tate & Lyle did acknowledge that trading in April had deteriorated sharply for Primary Products in particular - with North American sweetener volumes down by 26%.

The German bank, which reiterated its 'hold' rating on the group, now forecasts group volumes to be down by 5% in 2021 and earnings per share to be down 20% year-on-year.